EXHIBIT 10.17
DEUTSCHE/TRANSCAP
Health Related Facility
Form
Last Revised 2/11/98
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DMG TEXAS ALC PARTNERS, L.P.,
a Texas limited partnership
as Grantor
to
AMERICAN TITLE COMPANY OF HOUSTON,
as Trustee
for the benefit of
TRANSATLANTIC CAPITAL COMPANY, L.L.C.,
as Beneficiary
Assisted Living Concepts Properties
Johnson, Grayson, Collin, Midland, Jefferson, Dallas, and Hopkins Counties,
Texas
DEED OF TRUST AND SECURITY AGREEMENT
$ 14,630,000.00
Date: March 31, 1998
PREPARED BY AND UPON RECORDATION RETURN TO:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Jeffrey Lee, Esq.
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TABLE OF CONTENTS
Page
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ARTICLE I. TAXES AND UTILITIES..................................... 4
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1.1. Payment of Taxes............................................ 4
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1.2. Tax and Insurance Impound Account........................... 5
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1.3. Payment of Utilities, Assessments, Charges, Etc............. 5
1.4. Additional Taxes............................................ 5
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ARTICLE II. INSURANCE.............................................. 6
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2.1. Insurance................................................... 6
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ARTICLE III. CASUALTY AND CONDEMNATION............................. 8
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3.1. Casualty and Condemnation................................... 9
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ARTICLE IV. ENVIRONMENTAL MATTERS.................................. 11
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4.1. Hazardous Waste and Other Substances........................ 11
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ARTICLE V. RESERVES................................................ 14
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5.1. Payment Reserve............................................. 14
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5.2. Replacement Reserve......................................... 15
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5.3. Intentionally Omitted....................................... 17
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ARTICLE VI. RENTS; LEASES; ALIENATION.............................. 17
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6.1. Rents and Profits........................................... 18
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6.2. Leases...................................................... 18
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6.3. Alienation and Further Encumbrances......................... 20
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6.4. Easements and Rights-of-Way................................. 21
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6.5. Partial Release of Mortgaged Property....................... 22
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ARTICLE VII. PROPERTY MANAGEMENT................................... 22
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7.1. Management.................................................. 23
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ARTICLE VIII. INDEMNIFICATION...................................... 23
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8.1. Indemnification; Subrogation................................ 23
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ARTICLE IX. REPORTING.............................................. 24
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9.1. Access Privileges and Inspections........................... 24
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9.2. Financial Statements and Books and Records.................. 24
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ARTICLE X. WARRANTIES AND COVENANTS........................................ 26
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10.1. Warranties of Grantor.............................................. 26
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10.2. Waste; Alteration of Improvements.................................. 29
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10.3. Zoning............................................................. 29
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10.4. Covenants with Respect to Indebtedness, Operations, Fundamental
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Changes of Grantor................................................. 29
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10.5. Accounts Receivable Financing...................................... 31
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ARTICLE XI. FURTHER ASSURANCES............................................. 33
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11.1. Defense of Title................................................... 34
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11.2. Performance of Obligations......................................... 34
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11.3. Construction Liens................................................. 34
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11.4. Further Documentation.............................................. 34
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11.5. Payment of Costs; Beneficiary's Right to Cure...................... 35
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11.6. Compliance with Laws............................................... 36
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11.7. Attorney-in-Fact Provisions........................................ 36
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ARTICLE XII. PAYMENT; DEFEASANCE; PREPAYMENT.............................. 36
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12.1. Payment of the Notes............................................... 36
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12.2. Computation of Interest............................................ 37
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12.3. Application of Payments............................................ 37
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12.4. Prepayment......................................................... 37
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12.5. Defeasance......................................................... 37
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ARTICLE XIII. SECURITY PROVISIONS.......................................... 40
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13.1. Security Interest.................................................. 40
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13.2. Security Agreement................................................. 41
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13.3. Secured Indebtedness................................................ 42
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ARTICLE XIV. DEFAULT....................................................... 42
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14.1. Events of Default.................................................. 42
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ARTICLE XV. REMEDIES....................................................... 44
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15.1. Remedies Available................................................. 44
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15.2. Application of Proceeds............................................ 47
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15.3. Right and Authority of Receiver or Beneficiary in the Event of
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Default; Power of Attorney........................................ 47
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15.4. Occupancy After Foreclosure........................................ 49
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15.5. Notice to Account Debtors....................................... 49
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15.6. Cumulative Remedies............................................. 49
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15.7. Payment of Expenses............................................. 49
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15.8. Grantor's Waivers............................................... 49
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15.9. Submission to Jurisdiction; Waiver of Jury Trial................ 50
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ARTICLE XVI. MISCELLANEOUS TERMS AND CONDITIONS......................... 51
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16.1. Time of Essence................................................. 51
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16.2. Release of Mortgage............................................. 51
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16.3. Notices......................................................... 51
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16.4. Successors and Assigns; Joint and Several Liability............. 51
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16.5. Severability.................................................... 52
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16.6. Gender.......................................................... 52
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16.7. Waiver; Discontinuance of Proceedings........................... 52
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16.8. Section Headings................................................ 52
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16.9. Governing Law................................................... 52
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16.10. Counting of Days............................................... 52
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16.11. Relationship of the Parties.................................... 53
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16.12. Unsecured Portion of Indebtedness.............................. 53
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16.13. Cross Default.................................................. 53
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16.14. Inconsistency with Other Loan Documents........................ 53
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16.15. No Merger...................................................... 53
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16.16. Rights With Respect to Junior Encumbrances..................... 53
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16.17. Beneficiary May File Proofs of Claim........................... 53
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16.18. Fixture Filing................................................. 53
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16.19. Counterparts................................................... 54
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16.20. Recording and Filing........................................... 54
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16.21. Entire Agreement and Modifications............................. 54
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16.22. MAXIMUM INTEREST............................................... 54
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16.23. Certain Matters Relating to Mortgaged Property Located in the
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State of Texas................................................. 55
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ARTICLE XVII. CONCERNING THE TRUSTEE.................................... 58
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17.1. Certain Rights.................................................. 58
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17.2. Retention of Money.............................................. 58
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17.3. Successor Trustees................................................ 58
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17.4. Perfection of Appointment......................................... 59
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17.5. Succession Instruments............................................ 59
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17.6. No Representation by Trustee or Beneficiary....................... 59
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EXHIBIT A -- LEGAL DESCRIPTION
EXHIBIT B -- INTENTIONALLY DELETED
SCHEDULE I -- PARCEL RELEASE ALLOCATION AMOUNTS
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INDEX OF DEFINITIONS
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"Accounts Receivable" - Paragraph 15 of the granting clause
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"Accounts Receivable Acquiror" - Section 10.5
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"Accrued Interest" - Intentionally Deleted
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"ACM's" - Section 4.1(i)
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"All Future Payments" - Section 12.4(c)
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"Annual Budget" - Intentionally Deleted
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"Approved Annual Budget" - Intentionally Deleted
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"A/R Financing" - Section 10.5(b)
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"A/R Financing Documents" - Section 10.5(b)
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"Assignment" - Section 6.1
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"Buyer" - Section 6.3(b)(2)
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"Cash Expenses" - Intentionally Deleted
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"Code" - Section 12.5
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"CERCLA" - Section 4.1(a)
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"Collateral" - Section 13.1
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"Contracts" - Paragraph 9 of the granting clause
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"Debt" - Last paragraph of the securing clause
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"Default" - Section 1.2
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"Default Interest Rate" - As defined in the Note
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"Defeasance Collateral" - Section 12.5(c)(2)
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"Defeasance Security Agreement" - Section 12.5(c)(1)
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"Deferred Maintenance" - Section 5.3
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"Disbursement Agreement" - Intentionally Deleted
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"Engineering Report" - Section 5.3
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"Environmental Indemnity Agreement" - Section 4.1
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"Environmental Laws" - Section 4.1(a)
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"Extraordinary Expense" - Intentionally Deleted
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"General Intangibles" - Paragraph 11 of the granting clause
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"Governmental Entity" - Paragraph 11 of the granting clause
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"Hazardous Substances" - Section 4.1(a)
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"Health Care Operating Licenses" - Section 10.1(f)
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"Impound Account" - Section 1.2
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"Improvements" - Paragraph 2 of the granting clause
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"Indemnitor" - Section 10.1(b)
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"Insurer" - Paragraph 15 of the granting clause
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"Interest" - Section 16.22
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"Lead Based Paint" - Section 4.1(g)
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"Lead Based Paint Report" - Section 4.1(j)
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"Lease; Leases" - Paragraph 8 of the granting clause
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"Licenses" - Section 10.1(f)
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"Loan Documents" - Paragraph B of the securing clause
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"MAGR" - Section 10.5(c)
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"Maintenance Program" - Section 4.1(i)
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"Maturity Date" - As defined in the Note
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"Monthly Payment" - As defined in the Note
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"Mortgaged Property" - First paragraph of the granting clause
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"Note" - Paragraph A of the securing clause
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"O&M Plan" - Section 4.1(k)
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"Optional Prepayment Date" - Intentionally Deleted
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"Payment Dates" - As defined in the Note
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"Payment Reserve" - Section 5.1(a)
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"Permitted Encumbrances" - Section 10.1(a)
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"Permitted Materials" - Section 4.1(a)
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"Premises" - Paragraph 1 of the granting clause
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"Release Date" - Section 12.5(A)
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"REMIC" - Section 12.5
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"Rent Account" - Intentionally Deleted
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"Rent Roll" - Section 10.1(t)
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"Rents and Profits" - Paragraph 8 of the granting clause
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"Repair and Remediation Reserve" - Intentionally Deleted
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"Replacement Reserve" - Section 5.2(a)
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"Replacements" - Section 5.2(a)
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"Reserves" - Section 5.2(c)
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"Residency or Occupancy Agreement" - Section 6.2(d)
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"Revised Interest Rate" - Section 12.2
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"Sale" - Section 6.3(b)
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"Stub Interest" - As defined in the Note
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"Tenant; Tenants" - Paragraph 8 of the granting clause
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"UCC" - Paragraph 7 of the granting clause
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DEED OF TRUST AND SECURITY AGREEMENT
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THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of Trust") is dated
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as of March 31, 1998 and is given by DMG TEXAS ALC PARTNERS, L.P., a Texas
limited partnership, as Grantor ("Grantor"), whose address is 9955 S.E.
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Washington, Suite 201, Portland, Oregon 97216, to AMERICAN TITLE COMPANY OF
HOUSTON, whose address is 5 Post Oak Park, Houston, Texas 77027, as Trustee
("Trustee") for the benefit of TRANSATLANTIC CAPITAL COMPANY, L.L.C., a Delaware
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limited liability company, as Beneficiary, and its successors and/or assigns
("Beneficiary"), whose address is 31 West 52nd Street, 12th Floor, New York, New
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York 10019.
W I T N E S S E T H:
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In order to secure:
The debt evidenced by that certain Promissory Note (such Promissory
Note, together with any and all renewals, amendments, modifications,
consolidations and extensions thereof, is hereinafter referred to as the "Note")
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of even date with this Deed of Trust, made by Grantor payable to the order of
Beneficiary in the principal face amount of FOURTEEN MILLION SIX HUNDRED THIRTY
THOUSAND AND NO/100 DOLLARS ($ 14,630,000.00), together with interest as therein
provided;
The full and prompt payment and performance of all of the provisions,
agreements, covenants and obligations herein contained and contained in any
other agreements, documents or instruments now or hereafter evidencing, securing
or otherwise relating to the Debt (the Note, this Deed of Trust, and such other
agreements, documents and instruments, together with any and all renewals,
amendments, extensions and modifications thereof, are hereinafter collectively
referred to as the "Loan Documents") and the payment of all other sums herein or
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therein covenanted to be paid;
Any and all additional advances made by Beneficiary to protect or
preserve the Mortgaged Property or the lien or security interest created hereby
on the Mortgaged Property, or for any other purpose provided herein or in the
other Loan Documents (whether or not the original Grantor remains the owner of
the Mortgaged Property at the time of such advances); and
Any and all other indebtedness now owing or which may hereafter be
owing by Grantor to Beneficiary, however and whenever incurred or evidenced,
whether express or implied, direct or indirect, absolute or contingent, or due
or to become due.
(All of the sums and covenants referred to in Paragraphs (A) through (D) above
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are herein referred to as the "Debt");
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And in consideration of the Debt and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Grantor hereby
irrevocably mortgages, grants, bargains, sells, conveys, transfers, pledges,
sets over and assigns to Beneficiary and Trustee, WITH POWER OF SALE, and
creates a security interest in, all of Grantor's estate, right, title and
interest in, to and under any and all of the following described property,
whether now owned or hereafter acquired by Grantor (collectively, the "Mortgaged
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Property"):
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(1) All that certain real property situated in the Counties of Johnson,
Grayson, Collin, Midland, Jefferson, Dallas, and Hopkins, State of Texas, more
particularly described in Exhibit A
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attached hereto (the "Premises"), together with all of the easements, rights and
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appurtenances now or hereafter in any way appertaining thereto, either at law or
in equity, whether now owned or hereafter acquired by Grantor;
(2) All structures, buildings and improvements of every kind and
description now or at any time hereafter located on the Premises (the
"Improvements");
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(3) All easements, rights-of-way, strips and gores of land, vaults,
streets, ways, alleys, passages, sewer rights, and other emblements now or
hereafter located on the Premises or under or above the same or any part
thereof, and all estates, rights, interests and appurtenances, reversions and
remainders whatsoever, in any way belonging or appertaining to the Mortgaged
Property or any part thereof, whether now owned or hereafter acquired by
Grantor;
(4) All water, ditches, wells, reservoirs and drains and all water, ditch,
well, reservoir and drainage rights which are appurtenant to, located on, under
or above or used in connection with the Premises or the Improvements, or any
part thereof, whether now existing or hereafter created or acquired by Grantor;
(5) All minerals, crops, timber, trees, shrubs, flowers and landscaping
features now or hereafter located on, under or above the Premises;
(6) All building materials, supplies and equipment now or hereafter placed
on the Premises or in the Improvements;
(7) All furniture, furnishings, fixtures, goods, equipment, inventory or
personal property owned by Grantor and now or hereafter located on, attached to
or used in and about the Improvements, including, but not limited to, all
machines, engines, boilers, dynamos, elevators, stokers, tanks, cabinets,
awnings, screens, shades, blinds, carpets, draperies, bedding and linens and all
appliances, communication, plumbing, heating, air conditioning, lighting,
ventilating, refrigerating, disposal and incinerating equipment, and sprinkler
and fire and theft protection equipment, and all fixtures and appurtenances
thereto, and such other goods and chattels and personal property owned by
Grantor as are now or hereafter used or furnished in operating the Improvements,
or the activities conducted therein, and all building materials and equipment
hereafter situated on or about the Premises or Improvements, and all warranties
and guaranties relating thereto, and all additions thereto and substitutions and
replacements therefor (exclusive of any of the foregoing owned or leased by
tenants of space in the Improvements except to the extent any of the same
constitute fixtures) (collectively, the "Equipment"). To the extent any portion
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of the Equipment is not deemed real property or Fixtures under applicable law,
it shall be deemed to be personal property, and this Deed of Trust shall be
deemed to constitute a security agreement for the purposes of creating a
security interest therein in favor of Lender under the Uniform Commercial Code
of the state in which the Premises are located (the "UCC");
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(8) All leases (including, without limitation, oil, gas and mineral
leases), licenses, concessions, residency and occupancy agreements of all or any
part of the Premises or the Improvements (each, a "Lease" and collectively,
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"Leases"),whether written or oral, now or hereafter entered into and all rents,
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royalties, issues, profits, bonus money, revenue, income, rights and other
benefits (collectively, the "Rents and Profits") of the Premises or the
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Improvements, now or hereafter arising from the use or enjoyment of all or any
portion thereof or from any present or future Lease or other agreement
pertaining thereto or any of the General Intangibles and all cash or securities
deposited to secure performance by the tenants, lessees or licensees (each, a
"Tenant" and collectively, "Tenants"), as applicable, of their obligations under
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any such Leases, whether said cash or securities are to be held until the
expiration of the terms of said Leases or applied to one or more of the
installments of rent coming due prior to the expiration of said terms, subject,
however, to the provisions contained in Section 6.1 hereinbelow;
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(9) All contracts and agreements now or hereafter entered into covering any
part of the Premises or the Improvements (collectively, the "Contracts") and all
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revenue, income and other benefits thereof, including, without limitation,
management agreements, service contracts, maintenance contracts, equipment
leases, personal property leases and any contracts or documents relating to
construction on any part of the Premises or the Improvements (including all
architectural renderings, models, specifications, plans, drawings, surveys,
tests, reports, data, bonds and governmental approvals) or to the management or
operation of any part of the Premises or the Improvements;
(10) All water taps, sewer taps, certificates of occupancy, permits,
licenses, franchises, Health Care Operating Licenses (to the extent that it may
be lawfully mortgaged), certificates, consents, approvals and other rights and
privileges now or hereafter obtained in connection with the Premises or the
Improvements and all present and future warranties and guaranties relating to
the Improvements or to any equipment, fixtures, furniture, furnishings, personal
property or components of any of the foregoing now or hereafter located or
installed on the Premises or the Improvements;
(11) All present and future funds, accounts, instruments, accounts
receivable, documents, claims, general intangibles (including, without
limitation, trademarks, trade names, service marks and symbols now or hereafter
used in connection with any part of the Premises or the Improvements, all names
by which the Premises or the Improvements may be operated or known, all rights
to carry on business under such names, and all rights, interest and privileges
which Grantor has or may have as developer or declarant under any covenants,
restrictions or declarations now or hereafter relating to the Premises or the
Improvements) (collectively, the "General Intangibles");
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(12) All insurance policies or binders now or hereafter relating to the
Mortgaged Property, including any unearned premiums thereon;
(13) All cash funds, deposit accounts and other rights and evidence of
rights to cash, now or hereafter created or held by Beneficiary pursuant to this
Deed of Trust or any other of the Loan Documents, including, without limitation,
all funds now or hereafter on deposit in the Impound Account, the Payment
Reserve, the Replacement Reserve and all notes or chattel paper now or hereafter
arising from or by virtue of any transactions related to the Premises or the
Improvements;
(14) All present and future monetary deposits given by Grantor to any
public or private utility with respect to utility services furnished to any part
of the Premises or the Improvements, to the extent Grantor is entitled to the
returns thereof;
(15) To the extent that same may be lawfully mortgaged, all rights to
receive payments owing to Grantor arising out of the rendition of services at or
from the Premises to individuals by Grantor, including all rights to
reimbursement under any agreements with, and payments from, any Insurer or
Governmental Entity, together with all accounts and general intangibles related
thereto, all rights and remedies, claims, guaranties, security interests and
liens in respect of the foregoing, all books, records and other property
evidencing or related to the foregoing and all proceeds of the foregoing, but
not including Rents and Profits (the
"Accounts Receivable"). As used herein, "Insurer" means any entity
which in the ordinary course of its business or activities agrees to pay for
healthcare goods and services received by individuals, including commercial
insurance companies, non-profit insurance companies (such as Blue Cross and Blue
Shield entities), employers or unions which self-insure for employee or member
health insurance, prepaid health care organizations, preferred provider
organizations, health maintenance organizations and insurance companies issuing
health, personal injury, workers' compensation or other types of insurance. As
used herein, "Governmental Entity" means the United States of America, any
state, any political subdivision of a state and any agency or instrumentality of
the United States of America or any state or political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government. Payments from
Governmental Entities shall be deemed to include payments governed under the
Social Security Act (42 U.S.C. 1395, et. seq.), including payments under
Medicare and Medicaid, and payments administered or regulated by the Health Care
Financing Administration;
(16) All proceeds, products, substitutions and accessions (including claims
and demands therefor) of the conversion, voluntary or involuntary, of any of the
foregoing into cash or liquidated claims, including, without limitation,
proceeds of insurance and condemnation awards; and
(17) All other or greater rights and interests of every nature in the
Premises and the Improvements and in the possession or use thereof and income
therefrom, whether now owned or hereafter acquired by Grantor.
TO HAVE AND TO HOLD the Mortgaged Property unto Beneficiary and Trustee,
their respective successors and assigns forever, and Grantor does hereby bind
itself, its successors and assigns, to WARRANT AND FOREVER DEFEND the title to
the Mortgaged Property, subject only to the Permitted Encumbrances, to
Beneficiary and Trustee against every person whomsoever may lawfully claim the
same or any part thereof;
PROVIDED, HOWEVER, that if the Debt shall have been paid and performed in
full, then, in such case, the liens, security interests, estates and rights
granted by this Deed of Trust shall be satisfied and the estate, right, title
and interest of Beneficiary in the Mortgaged Property shall cease, and upon
payment to Beneficiary of all costs and expenses incurred for the preparation of
the release hereinafter referenced and all recording costs if allowed by law,
Beneficiary shall promptly satisfy and release this Deed of Trust of record and
the lien hereof by proper instrument.
For the purpose of further securing the Debt for so long as the Debt or any
part thereof remains incomplete or unpaid, Grantor covenants and agrees as
follows:
ARTICLE I.
TAXES AND UTILITIES
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1.1. Payment of Taxes. Grantor shall pay or cause to be paid, except to
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the extent provision is actually made therefor pursuant to Section 1.2 below,
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all taxes and assessments which are or may become a lien on any portion of, or
interest in, the Mortgaged Property or which are assessed against or imposed
upon any portion of, or interest in the Mortgaged Property. Grantor shall
furnish Beneficiary with receipts (or if receipts are not immediately available,
with copies of canceled checks evidencing payment with receipts to follow
promptly after they become available) showing payment of such taxes and
assessments at least fifteen (15) days prior to the applicable delinquency date
therefor. Notwithstanding the foregoing,
Grantor may, in good faith, by appropriate proceedings and upon notice to
Beneficiary, contest the validity, applicability or amount of any asserted tax
or assessment so long as (a) such contest is diligently pursued, (b) Beneficiary
determines, in its subjective opinion, that such contest suspends the obligation
to pay the tax and that nonpayment of such tax or assessment will not result in
the sale, loss, forfeiture or diminution of the Mortgaged Property or any part
thereof or any interest of Beneficiary therein and (c) prior to the earlier of
the commencement of such contest or the delinquency date of the asserted tax or
assessment, Grantor deposits in the Impound Account an amount determined by
Beneficiary to be adequate to cover the payment of such tax or assessment and an
additional sum sufficient in the sole judgment of Beneficiary to cover possible
interest, costs and penalties; provided, however, that taxes, assessments,
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interest, costs and penalties owing shall be paid by Grantor prior to the date
any writ or order is issued under which the Mortgaged Property may be sold, lost
or forfeited.
1.2. Tax and Insurance Impound Account. Grantor shall establish and
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maintain at all times while this Deed of Trust continues in effect an impound
account (the "Impound Account") with Beneficiary for payment of real estate
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taxes and assessments and insurance on the Mortgaged Property and as additional
security for the Debt. Simultaneously with the execution hereof, Grantor shall
deposit in the Impound Account an amount reasonably determined by Beneficiary.
Commencing on the first Payment Date under the Note and continuing thereafter on
each subsequent Payment Date, Grantor shall pay to Beneficiary, concurrently
with and in addition to the monthly payment due under the Note and until the
Debt is fully paid and performed, deposits in an amount equal to one-twelfth
(1/12) of the amount of the annual real estate taxes and assessments that will
next become due and payable on the Mortgaged Property, plus one-twelfth (1/12)
of the amount of the annual premiums that will next become due and payable on
insurance policies which Grantor is required to maintain hereunder, each as
estimated and determined by Beneficiary. So long as no Event of Default has
occurred which has not been waived, and no event has occurred or failed to occur
which with the passage of time, the giving of notice, or both would constitute
an Event of Default (a "Default"), all sums in the Impound Account shall be held
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by Beneficiary in the Impound Account to pay said taxes, assessments and
insurance premiums before the same become delinquent. Grantor shall be
responsible for ensuring the receipt by Beneficiary, at least thirty (30) days
prior to the respective due date for payment thereof, of all bills, invoices and
statements for all taxes, assessments and insurance premiums to be paid from the
Impound Account, and so long as no Event of Default has occurred and not been
waived, Beneficiary shall pay the governmental authority or other party entitled
thereto directly to the extent funds are available for such purpose in the
Impound Account. No interest on funds contained in the Impound Account, if any,
shall be paid by Beneficiary to Grantor.
1.3. Payment of Utilities, Assessments, Charges, Etc. Grantor shall pay
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when due all utility charges which are incurred by Grantor or which may become a
charge or lien against any portion of the Mortgaged Property for gas,
electricity, water and sewer services furnished to the Premises and/or the
Improvements and all other assessments or charges of a similar nature, or
assessments payable pursuant to any restrictive covenants, whether public or
private, affecting the Premises and/or the Improvements or any portion thereof,
whether or not such assessments or charges are or may become liens thereon.
1.4. Additional Taxes. In the event of the enactment after the date
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hereof of any law imposing upon Beneficiary the payment of the whole or any part
of the taxes or assessments or charges or liens herein required to be paid by
Grantor, or changing in any way the laws relating to the taxation of mortgages
or security agreements or the interest of the Beneficiary or secured party in
the property covered thereby, or the manner of collection of such taxes, so as
to
adversely affect this Deed of Trust or the Debt or Beneficiary, then, and in
any such event, Grantor, upon demand by Beneficiary, shall pay such taxes,
assessments, charges or liens, or reimburse Beneficiary therefor; provided,
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however, that if, in the opinion of counsel for Beneficiary, (a) it might be
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unlawful to require Grantor to make such payment or (b) the making of such
payment might result in the imposition of interest beyond the maximum amount
permitted by law, then and in either such event, Beneficiary may elect, by
notice in writing given to Grantor, to declare all of the Debt to be and become
due and payable in full ninety (90) days from the giving of such notice, and, in
connection with such payment of the Debt, no prepayment premium or fee shall be
due.
ARTICLE II.
INSURANCE
---------
2.1. Insurance. Grantor shall, at Grantor's expense, maintain in force
---------
and effect on the Mortgaged Property at all times while this Deed of Trust
continues in effect the following insurance:
(a) Insurance against loss or damage to the Mortgaged Property by
fire, windstorm, lightning, tornado and hail and against loss and damage by such
other, additional risks as may be now or hereafter embraced by an "all-risk"
form of insurance policy. The amount of such insurance shall be not less than
one hundred percent (100%) of the full replacement cost (insurable value) of the
Improvements (as established by an MAI appraisal), without reduction for
depreciation. The determination of the replacement cost amount shall be
adjusted annually to comply with the requirements of the insurer issuing such
coverage or, at Beneficiary's election, by reference to such indices, appraisals
or information as Beneficiary determines in its reasonable discretion in order
to reflect increased value due to inflation. In
addition, each policy chall contain inflation guard coverage. Full replacement
cost, as used herein, means, with respect to the Improvements, the cost of
replacing the Improvements without regard to deduction for depreciation,
exclusive of the cost of excavations, foundations without regard to deduction
for depreciation, exclusive of the cost of excavations, foundations and footings
below the lowest basement floor. Grantor shall also maintain insurance against
loss or damage to furniture, furnishings, fixtures, equipment and other items
(whether personality or fixtures0 included in the Mortgaged Property and owned
by Grantor from time to time to the extent applicable.
(b) Commercial General Liability Insurance against claims for personal
injury, bodily injury, death and property damage occurring on, in or about the
Premises or the Improvements in amounts not less than $1,000,000 per occurrence
and $2,000,000 in the aggregate plus umbrella coverage in an amount not less
than $2,000,000. Beneficiary hereby retains the right to periodically review
the amount of said liability insurance and to require an increase in the amount
of said liability insurance should Beneficiary deem an increase to be reasonably
prudent under then existing circumstances.
(c) Boiler and machinery insurance (including explosion coverage), if
steam boilers or other pressure-fired vessels are in operation at the Premises.
Minimum liability coverage per accident must equal the greater of the
replacement cost (insurable value) of the Improvements housing such boiler or
pressure-fired machinery or $2,000,000. If one or more HVAC units is in
operation at the Premises, "Systems Breakdowns" coverage shall be required, as
determined by Beneficiary. Minimum liability coverage per accident must equal
the replacement value of such unit(s).
(d) If the Improvements or any part thereof is situated in an area
designated by the Federal Emergency Management Agency ("FEMA") as a special
----
flood hazard area (Zone A or Zone V), flood insurance in an amount equal to the
lesser of: (a) the minimum amount required, under the terms of coverage, to
compensate for any damage or loss on a replacement basis (or the unpaid balance
of the Debt if replacement cost coverage is not available for the type of
building insured), or (b) the maximum insurance available under the appropriate
National Flood Insurance Administration program. The maximum deductible shall
be $10,000 per building or a higher minimum amount as required by FEMA or other
applicable law.
(e) During the period of any construction, renovation or alteration of
the existing Improvements which exceeds the lesser of 10% of the principal
amount of the Note or $500,000, at Beneficiary's request, a completed value,
"All Risk" Builder's Risk form or "Course of Construction" insurance policy in
non-reporting form, in an amount approved by Beneficiary, may be required.
During the period of any construction of any addition to the existing
Improvements, a completed value, "All Risk" Builder's Risk form or "Course of
Construction" insurance policy in non-reporting form, in an amount approved by
Beneficiary, shall be required.
(f) Worker's Compensation and Employer's Liability Insurance covering
all appropriate persons.
(g) Business income (loss of rents) insurance in amounts sufficient to
compensate Grantor for all Rents and Profits and other income during a period of
not less than twelve (12) months. The amount of coverage shall be adjusted
annually to reflect the Rents and Profits or income payable during the
succeeding twelve (12) month period.
(h) Such other insurance on the Mortgaged Property or on any
replacements or substitutions thereof or additions thereto as may from time to
time be required by Beneficiary against other insurable hazards or casualties
which at the time are commonly insured against in the case of property similarly
situated including, without limitation, sinkhole, mine subsidence, earthquake
and environmental insurance, due regard being given to the height and type of
Improvements, their construction, location, use and occupancy.
All such insurance shall (i) be with insurers fully licensed and authorized
to do business in the state within which the Premises is located and which have
and maintain a rating of at least A from Standard & Poors, or equivalent, (ii)
contain the complete address of the Premises (or a complete legal description),
(iii) be for terms of at least one year, with premium prepaid, and (iv) be
subject to the approval of Beneficiary as to insurance companies, amounts,
content, forms of policies and expiration dates, and (v) include a standard,
non-contributory, Beneficiary clause naming EXACTLY:
TRANSATLANTIC CAPITAL COMPANY, L.L.C.,
its successors and assigns, ATIMA
31 West 52nd Street
12th Floor
New York, New York 10019
(a) as an additional insured under all liability insurance policies, (b) as the
------------------
first Beneficiary and loss payee on all property insurance policies and (c) as
- -----------------
the loss payee on all loss of rents or loss of business income insurance
----------
policies.
Grantor shall deliver to Beneficiary certificates and policies evidencing
the insurance required to be maintained hereunder at least thirty (30) days
before any such insurance shall expire. Grantor further agrees that each such
insurance policy: (i) shall provide for at least thirty (30) days' prior
written notice to Beneficiary prior to any policy reduction or cancellation for
any reason other than non-payment of premium and at least ten (10) days' prior
written notice to Beneficiary prior to any cancellation due to non-payment of
premium; (ii) shall contain an endorsement or agreement by the insurer that any
loss shall be payable to Beneficiary in accordance with the terms of such policy
notwithstanding any act or negligence of Grantor or any other person which might
otherwise result in forfeiture of such insurance; (iii) shall waive all rights
of subrogation against Beneficiary; (iv) in the event that the Premises or the
Improvements constitutes a legal non-conforming use under applicable building,
zoning or land use laws or ordinances, shall include an ordinance and law
coverage endorsement which will contain Coverage A: "Loss Due to Operation of
Law" (with a minimum liability limit equal to Replacement Cost With Agreed Value
Endorsement), Coverage B: "Demolition Cost" and Coverage C: "Increased Cost of
Construction" coverages; (v) unless otherwise specified above, shall have a
maximum deductible of $10,000; (vi) shall contain a replacement cost endorsement
and either an agreed amount endorsement (to avoid the operation of any co-
insurance provisions) or a waiver of any co-insurance provisions, all subject to
Beneficiary's approval; and (vii) may be in the form of a blanket policy,
provided that, Grantor hereby acknowledges and agrees that failure to pay any
portion of the premium therefor which is not allocable to the Mortgaged Property
or any other action not relating to the Mortgaged Property which would otherwise
permit the issuer thereof to cancel the coverage thereof, would require the
Mortgaged Property to be insured by a separate, single-property policy and the
blanket policy must properly identify and fully protect the Mortgaged Property
as if a separate policy were issued for 100% of Replacement Cost at the time of
loss and otherwise meet all of Beneficiary's applicable insurance requirements
set forth in this Section 2.1. The delivery to Beneficiary of the insurance
policies or the certificates of insurance as provided above shall constitute an
assignment of all proceeds payable under such insurance policies relating to the
Mortgaged Property by Grantor to Beneficiary as further security for the Debt.
In the event of the foreclosure of this Deed of Trust, or other transfer of
title to the Mortgaged Property in extinguishment in whole or in part of the
Debt, all right, title and interest of Grantor in and to all proceeds payable
under such policies then in force concerning the Mortgaged Property shall
thereupon vest in the purchaser at such foreclosure, or in Beneficiary or other
transferee in the event of such other transfer of title. Approval of any
insurance by Beneficiary shall not be a representation of the solvency of any
insurer or the sufficiency of any amount of insurance. In the event Grantor
fails to provide, maintain, keep in force or deliver and furnish to Beneficiary
the policies of insurance required by this Deed of Trust or evidence of their
replacement or renewal as required herein, Beneficiary may, but shall not be
obligated to, procure such insurance and Grantor shall pay all amounts advanced
by Beneficiary therefor, together with interest thereon at the Default Interest
Rate from and after the date advanced by Beneficiary until actually repaid by
Grantor, promptly upon demand by Beneficiary. Beneficiary shall not be
responsible for nor incur any liability for the failure of the insurer to
perform, even though Beneficiary has caused the insurance to be placed with the
insurer after failure of Grantor to furnish such insurance. Grantor shall not
obtain insurance for the Mortgaged Property in addition to that required by
Beneficiary without the prior written consent of Beneficiary, which consent will
not be unreasonably withheld provided that (i) Beneficiary is a named insured on
such insurance, (ii) Beneficiary receives complete copies of all policies
evidencing such insurance, and (iii) such insurance complies with all of the
applicable requirements set forth herein.
ARTICLE III.
CASUALTY AND CONDEMNATION
-------------------------
3.1. Casualty and Condemnation. Grantor shall give Beneficiary prompt
-------------------------
written notice of the occurrence of any casualty affecting, or the institution
of any proceedings for eminent domain or for the condemnation of, the Mortgaged
Property or any portion thereof. All insurance proceeds on the Mortgaged
Property, and all causes of action, claims, compensation, awards and recoveries
for any damage, condemnation or taking of all or any part of the Mortgaged
Property or for any diminution in value of the Mortgaged Property, are hereby
assigned to and shall be paid to Beneficiary. Beneficiary may participate in
any suits or proceedings relating to any such proceeds, causes of action,
claims, compensation, awards or recoveries, and Beneficiary is hereby
authorized, in its own name or in Grantor's name, to adjust any loss covered by
insurance or any condemnation claim or cause of action, and to settle or
compromise any claim or cause of action in connection therewith, and Grantor
shall from time to time deliver to Beneficiary any instruments required to
permit such participation; provided, however, that, so long as no Default or
-------- -------
Event of Default shall have occurred and not been waived, Beneficiary shall not
have the right to participate in the adjustment of any loss which is not in
excess of the lesser of (i) five percent (5%) of the then outstanding principal
balance of the Note and (ii) $100,000. Beneficiary shall apply any sums
received by it under this Section first to the payment of all of its costs and
expenses (including, but not limited to, reasonable legal fees and
disbursements) incurred in obtaining those sums, and then, as follows:
(a) In the event that less than sixty percent (60%) of the
Improvements located on the Premises have been taken or destroyed, then if and
so long as:
(1) no Default or Event of Default has occurred hereunder or
under any of the other Loan Documents and has not been waived, and
(2) the Mortgaged Property can, in Beneficiary's judgment, with
diligent restoration or repair, be returned to a condition at least equal
to the condition thereof that existed prior to the casualty or partial
taking causing the loss or damage within the earlier to occur of (i) nine
(9) months after the receipt of insurance proceeds or condemnation awards
by either Grantor or Beneficiary, and (ii) sixty (60) days prior to the
stated maturity date of the Note, and
(3) all necessary governmental approvals can be obtained to allow
the rebuilding and reoccupancy of the Mortgaged Property as described in
subsection (2) above, and
--------------
(4) there are sufficient sums available (through insurance
proceeds or condemnation awards and contributions by Grantor, the full
amount of which shall, at Beneficiary's option, have been deposited with
Beneficiary) for such restoration or repair (including, without limitation,
for any costs and expenses of Beneficiary to be incurred in administering
said restoration or repair) and for payment of principal and interest to
become due and payable under the Note during such restoration or repair,
and
(5) the economic feasibility of the Improvements after such
restoration or repair will be such that income from their operation is
reasonably anticipated to be sufficient to pay operating expenses of the
Mortgaged Property and debt service on the Debt in full with the same
coverage ratio considered by Beneficiary in its determination to make the
loan secured hereby, and
(6) in the event that the insurance proceeds or condemnation
awards received as a result of such casualty or partial taking exceed the
lesser of (i) five percent (5%) of the then outstanding principal balance
of the Note and (ii) $150,000, Grantor shall have delivered to Beneficiary,
at Grantor's sole cost and expense, an appraisal report from an appraiser
satisfactory to Beneficiary in form and substance satisfactory to
Beneficiary appraising the value of the Mortgaged Property as proposed to
be restored or repaired to be not less than the appraised value of the
Mortgaged Property considered by Beneficiary in its determination to make
the loan secured hereby, and
(7) Grantor so elects by written notice delivered to Beneficiary
within five (5) days after settlement of the aforesaid insurance or
condemnation claim,
then, Beneficiary shall, solely for the purposes of such restoration or repair,
advance so much of the remainder of such sums as may be required for such
restoration or repair, and any funds deposited by Grantor therefor, to Grantor
in the manner and upon such terms and conditions as would be required by a
prudent interim construction lender, including, but not limited to, the prior
approval by Beneficiary of plans and specifications, contractors and form of
construction contracts and the furnishing to Beneficiary of permits, bonds, lien
waivers, invoices, receipts and affidavits from contractors and subcontractors,
in form and substance satisfactory to Beneficiary in its discretion, with any
remainder being applied by Beneficiary for payment of the Debt in whatever order
Beneficiary directs in its absolute discretion.
(b) In all other cases, namely, in the event that sixty percent (60%)
or more of the Improvements located on the Premises have been taken or destroyed
or Grantor does not elect to restore or repair the Mortgaged Property pursuant
to clause (a) above or otherwise fails to meet the requirements of clause (a)
---------- ----------
above, then, in any of such events, Beneficiary may elect, in Beneficiary's
absolute discretion and without regard to the adequacy of Beneficiary's
security, to do either of the following: (1) accelerate the maturity date of
the Note and declare any and all of the Debt to be immediately due and payable
and apply the remainder of such sums received pursuant to this Section to the
payment of the Debt in whatever order Beneficiary directs in its absolute
discretion, with any remainder being paid to Grantor, or (2) notwithstanding
that Grantor may have elected not to restore or repair the Mortgaged Property
pursuant to the provisions of Section 3.1(a)(7) above, require Grantor to
-----------------
restore or repair the Mortgaged Property in the manner and upon such terms and
conditions as would be required by a prudent interim construction lender,
including, but not limited to, the deposit by Grantor with Beneficiary, within
thirty (30) days after demand therefor, of any deficiency reasonably determined
by Beneficiary to be necessary in order to assure the availability of sufficient
funds to pay for such restoration or repair, including Beneficiary's costs and
expenses to be incurred in connection therewith, the prior approval by
Beneficiary of plans and specifications, contractors and form of construction
contracts and the furnishing to Beneficiary of permits, bonds, lien waivers,
invoices, receipts and affidavits from contractors and subcontractors, in form
and substance satisfactory to Beneficiary in its discretion, and apply the
remainder of such sums toward such restoration and repair, with any balance
thereafter remaining being applied by Beneficiary for payment of the Debt in
whatever order Beneficiary directs in its absolute discretion.
Any reduction in the Debt resulting from Beneficiary's application of
any sums received by it hereunder shall take effect only when Beneficiary
actually receives such sums and elects to apply such sums to the Debt and, in
any event, the unpaid portion of the Debt shall remain in full force and effect
and Grantor shall not be excused in the payment thereof. Partial payments
received by Beneficiary, as described in the preceding sentence, shall be
applied first to the final payment due under the Note and thereafter to
installments due under the Note in the inverse order of their due date. If
Grantor elects or Beneficiary directs Grantor to restore or repair the Mortgaged
Property after the occurrence of a casualty or partial taking of the Mortgaged
Property as provided above, Grantor shall promptly and diligently, at Grantor's
sole cost and expense and regardless of whether the insurance proceeds or
condemnation award, as appropriate, shall be sufficient for such purpose,
restore, repair, replace and rebuild the Mortgaged Property as nearly as
possible to its value, condition and character immediately prior to such
casualty or partial taking in accordance with the foregoing provisions and
Grantor shall pay to Beneficiary all costs and expenses of Beneficiary incurred
in administering said rebuilding, restoration or repair. Grantor agrees to
execute and deliver from time to time such further instruments as may be
requested by Beneficiary to confirm the assignment to Beneficiary of any award,
damage, insurance proceeds, payment or other compensation. Beneficiary is hereby
irrevocably constituted and appointed the attorney-in-fact of Grantor, with full
power of substitution, subject to the terms of this Section, to settle for,
collect and receive any such awards, damages, insurance proceeds, payments or
other compensation from the parties or authorities making the same, to appear in
and prosecute any proceedings therefor and to give receipts and acquittances
therefor.
ARTICLE IV.
ENVIRONMENTAL MATTERS
---------------------
4.1. Hazardous Waste and Other Substances.
------------------------------------
(a) Grantor hereby represents and warrants to Beneficiary that, as of
the date hereof: (i) to the best of Grantor's knowledge, information and
belief, none of Grantor nor the Mortgaged Property nor any Tenant at the
Premises nor the operations conducted thereon has at any time been or presently
is in direct or indirect violation of or otherwise exposed to any liability
under any local, state or federal law, rule or regulation or common law duty
pertaining to human health, natural resources or the environment (collectively,
"Environmental Laws"), including, without limitation, the Comprehensive
------------------
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. (S)
9601 et seq.) ("CERCLA"), the Resource Conservation and Recovery Act of 1976 (42
------
U.S.C. (S) 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. (S)
------
1251 et seq.), the Clean Air Act (42 U.S.C. (S) 7401 et seq.), the Emergency
------ ------
Planning and Community-Right-to-Know Act (42 U.S.C. (S) 11001 et seq.), the
-------
Endangered Species Act (16 U.S.C. (S) 1531 et seq.), the Toxic Substances
------
Control Act (15 U.S.C. (S) 2601 et seq.), the Occupational Safety and Health Act
------
(29 U.S.C. (S) 651 et seq.) or the Hazardous Materials Transportation Act (49
------
U.S.C. (S) 1801 et seq.), or any regulations promulgated pursuant to said laws,
------
all as amended from time to time; (ii) no hazardous, toxic or harmful
substances, wastes, materials, pollutants or contaminants (including, without
limitation, asbestos or asbestos-containing materials, lead based paint,
polychlorinated biphenyls, petroleum or petroleum products or byproducts,
flammable explosives, radioactive materials, infectious substances or raw
materials which include hazardous constituents) or any other substances or
materials which are included under or regulated by Environmental Laws
(collectively, "Hazardous Substances") are located on, in or under or have been
--------------------
handled, generated, stored, processed or disposed of on or released or
discharged from the Mortgaged Property (including underground contamination),
except for those substances used by Grantor or any Tenant in the ordinary course
of their respective businesses and in compliance with all Environmental Laws and
where such could not reasonably be expected to give rise to liability under
Environmental Laws ("Permitted Materials"); (iii) the Mortgaged Property is not
-------------------
subject to any private or governmental lien arising under Environmental Laws;
(iv) there is no pending, nor, to Grantor's knowledge, information or belief,
threatened litigation arising under Environmental Laws
affecting Grantor or the Mortgaged Property; there are no and have been no
existing or closed underground storage tanks or other underground storage
receptacles for Hazardous Substances or landfills or dumps on the Mortgaged
Property; (v) Grantor has received no notice of, and to the best of Grantor's
knowledge and belief, there exists no investigation, action, proceeding or claim
by any agency, authority or unit of government or by any third party which could
result in any liability, penalty, sanction or judgment under any Environmental
Laws with respect to any condition, use or operation of the Mortgaged Property,
nor does Grantor know of any basis for such an investigation, action, proceeding
or claim; and (vi) Grantor has received no notice of and, to the best of
Grantor's knowledge and belief, there has been no claim by any party that any
use, operation or condition of the Mortgaged Property has caused any nuisance or
any other liability or adverse condition on any other property, nor does Grantor
know of any basis for such an investigation, action, proceeding or claim.
(b) Grantor has not received nor, to the best of Grantor's knowledge,
information and belief has there been issued, any notice, notification, demand,
request for information, citation, summons, or order in any way relating to any
actual, alleged or potential violation or liability arising under Environmental
Laws.
(c) Neither the Mortgaged Property, nor to the best of Grantor's
knowledge, information and belief, any property to which Grantor has, in
connection with the maintenance or operation of the Mortgaged Property, directly
or indirectly transported or arranged for the transportation of any Hazardous
Substances is listed or, to the best of Grantor's knowledge, information and
belief, proposed for listing on the National Priorities List promulgated
pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal
or state list of sites requiring environmental investigation or clean-up.
(d) Grantor shall comply with all applicable Environmental Laws.
Grantor shall keep or cause the Mortgaged Property to be kept free from
Hazardous Substances (except Permitted Materials).
(e) Grantor shall promptly notify Beneficiary of (i) the actual or
potential existence of any Hazardous Substances on the Mortgaged Property other
than Permitted Materials, (ii) any direct or indirect violation relating to the
Mortgaged Property of, or other exposure to liability under, any Environmental
Laws, (iii) any lien, action or notice affecting the Mortgaged Property or
Grantor resulting from any violation or alleged violation of or liability or
alleged liability under any Environmental Laws arising from any condition or
activity on the Mortgaged Property, (iv) the institution of any investigation,
inquiry or proceeding concerning Grantor or the Mortgaged Property pursuant to
any Environmental Laws or otherwise relating to Hazardous Substances, or (v) the
discovery of any occurrence, condition or state of facts which would render any
representation or warranty contained in this Deed of Trust incorrect in any
respect if made at the time of such discovery. Immediately upon receipt of same,
Grantor, shall deliver to Beneficiary copies of any and all requests for
information, complaints, citations, summonses, orders, notices, reports or other
communications, documents or instruments in any way relating to any actual,
alleged or potential violation or liability of any nature whatsoever arising
under Environmental Laws and relating to the Mortgaged Property or to Grantor.
Grantor shall remedy or cause to be remedied in a timely manner (and in any
event within the time period permitted by applicable Environmental Laws) any
violation of Environmental Laws or any condition that could give rise to
liability under Environmental Laws. Without limiting the foregoing, Grantor
shall, promptly and regardless of the source of the contamination or threat to
the environment or human health, at its own expense, take all actions as shall
be necessary or prudent, for the clean-up of any and all portions of the
Mortgaged Property or other affected
property, including, without limitation, all investigative, monitoring, removal,
containment and remedial actions in accordance with all applicable Environmental
Laws (and in all events in a manner satisfactory to Beneficiary) and shall
further pay or cause to be paid, at no expense to Beneficiary, all clean-up,
administrative and enforcement costs of applicable governmental agencies which
may be asserted against the Mortgaged Property. In the event Grantor fails to do
so, Beneficiary may, but shall not be obligated to, cause the Mortgaged Property
or other affected property to be freed from any Hazardous Substances or
otherwise brought into conformance with Environmental Laws. Grantor hereby
grants to Beneficiary and its agents and employees access to the Mortgaged
Property and a license to remove any items deemed by Beneficiary to be Hazardous
Substances and to do all things Beneficiary shall deem necessary to bring the
Mortgaged Property into conformance with Environmental Laws.
(f) Grantor covenants and agrees, at Grantor's sole cost and expense,
to indemnify, defend (at trial and appellate levels, and with attorneys,
consultants and experts acceptable to Beneficiary), and hold Beneficiary
harmless from and against any and all liens, damages (including without
limitation, punitive or exemplary damages), losses, liabilities (including,
without limitation, strict liability), obligations, settlement payments,
penalties, fines, assessments, citations, directives, claims, litigation,
demands, defenses, judgments, suits, proceedings, costs, disbursements or
expenses of any kind or of any nature whatsoever (including, without limitation,
reasonable attorneys', consultants' and experts' fees and disbursements actually
incurred in investigating, defending, settling or prosecuting any claim,
litigation or proceeding) which may at any time be imposed upon, incurred by or
asserted or awarded against Beneficiary or the Mortgaged Property, and arising
directly or indirectly from or out of: (i) any violation or alleged violation
of, or liability or alleged liability under, any Environmental Law; (ii) the
presence, release or threat of release of or exposure to any Hazardous
Substances on, in, under or affecting all or any portion of the Mortgaged
Property or any surrounding areas, regardless of whether or not caused by or
within the control of Grantor; (iii) any transport, treatment, recycling,
storage, disposal or arrangement therefor of Hazardous Substances whether on the
Mortgaged Property, originating from the Mortgaged Property, or otherwise
associated with Grantor or any operations conducted on the Mortgaged Property at
any time; (iv) the failure by Grantor to comply fully with the terms and
conditions of this Section 4.1; (v) the breach of any representation or warranty
-----------
contained in this Section 4.1; and (vi) the enforcement of this Section 4.1.
----------- -----------
The indemnity set forth in this Section 4.1 shall also include any diminution in
-----------
the value of the security afforded by the Mortgaged Property or any future
reduction in the sales price of the Mortgaged Property by reason of any matter
set forth in this Section 4.1. Beneficiary's rights under this Section shall
-----------
survive payment in full of the Debt and shall be in addition to all other rights
of Beneficiary under this Deed of Trust, the Note and the other Loan Documents.
(g) Upon Beneficiary's request, at any time after the occurrence of an
Event of Default which has not been waived or at such other time as Beneficiary
has reasonable grounds to believe that Hazardous Substances are or have been
released, stored or disposed of on the Mortgaged Property, or on property
affecting the Mortgaged Property, or that the Mortgaged Property may be in
violation of the Environmental Laws, Grantor shall perform or cause to be
performed, at Grantor's sole cost and expense and in scope, form and substance
satisfactory to Beneficiary, an inspection or audit of the Mortgaged Property
prepared by a hydrogeologist or environmental engineer or other appropriate
consultant approved by Beneficiary indicating the presence or absence of
Hazardous Substances on the Mortgaged Property, the compliance or non-compliance
status of the Mortgaged Property and the operations conducted thereon with
applicable Environmental Laws, or an inspection or audit of the Mortgaged
Property prepared by an engineering or consulting firm approved by Beneficiary
indicating the presence or absence of friable asbestos or substances containing
asbestos or lead or substances containing lead or lead based paint ("Lead Based
----------
Paint") on the Mortgaged Property. If Grantor fails to provide reports of such
- -----
inspection or audit within thirty (30) days after such request, Beneficiary may
order the same at Grantor's expense, and Grantor hereby grants to Beneficiary
and its employees and agents access to the Mortgaged Property and an irrevocable
license to undertake such inspection or audit.
(h) Reference is made to that certain Environmental Indemnity
Agreement of even date herewith from Grantor and Assisted Living Concepts, Inc.
for the benefit of Beneficiary (the "Environmental Indemnity Agreement"). The
---------------------------------
provisions of this Deed of Trust and the Environmental Indemnity Agreement shall
be read together to maximize the coverage with respect to the subject matter
thereof, as determined by Beneficiary.
(i) If, prior to the date hereof, it was determined that the Mortgaged
Property contains Lead Based Paint, Grantor had prepared an assessment report
describing the location and condition of the Lead Based Paint (a "Lead Based
----------
Paint Report"). If, at any time hereafter, Lead Based Paint is suspected of
- ------------
being present on the Mortgaged Property, Grantor agrees, at its sole cost and
expense and within twenty (20) days thereafter, to cause to be prepared a Lead
Based Paint Report prepared by an expert, and in form, scope and substance,
acceptable to Beneficiary.
(j) Grantor agrees that if it has been, or if at any time hereafter it
is, determined that the Mortgaged Property contains Lead Based Paint, on or
before thirty (30) days following (i) the date hereof, if such determination was
made prior to the date hereof or (ii) such determination, if such determination
is hereafter made, as applicable, Grantor shall, at its sole cost and expenses,
develop and implement, and thereafter diligently and continuously carry out (or
cause to be developed and implemented and thereafter diligently and continually
to be carried out), an operations, abatement and maintenance plan for the Lead
Based Paint on the Mortgaged Property, which plan shall be prepared by an
expert, and be in form, scope and substance, acceptable to Beneficiary (together
with any Lead Based Paint Report, the "O&M Plan"). If an O&M Plan has been
--------
prepared prior to the date hereof, Grantor agrees to diligently and continually
carry out (or cause to be carried out) the provisions thereof. Compliance with
the O&M Plan shall require or be deemed to require, without limitation, the
proper preparation and maintenance of all records, papers and forms required
under the Environmental Laws.
ARTICLE V.
RESERVES
--------
5.1. Payment Reserve.
---------------
(a) Contemporaneously with the execution hereof, Grantor has
established with Beneficiary a reserve in the amount of one installment of the
Monthly Payment and deposits for any applicable reserves or escrow accounts
required under the terms of this Deed of Trust or the other Loan Documents as
calculated by Beneficiary (the "Payment Reserve"). Grantor understands and
---------------
agrees that, notwithstanding the establishment of the Payment Reserve as herein
required, all of the proceeds of the Note have been, and shall be considered,
fully disbursed and shall bear interest and be payable on the terms provided
therein. No interest on funds contained in the Payment Reserve shall be paid by
Beneficiary to Grantor.
(b) For so long as no Event of Default has occurred hereunder or under
any of the other Loan Documents and not been waived, Beneficiary shall, on the
first monthly
Payment Date under the Note, advance from the Payment Reserve to itself the
amount of the monthly installment due and payable by Grantor under the Note on
such Payment Date and shall also advance from the Payment Reserve into the
Impound Account the amount of any deposit for taxes and insurance premiums and
into the Replacement Reserve the amount of any deposit for Replacements and into
any other reserve account the amount of any deposit in accordance with the terms
of any other Loan Document required to be paid by Grantor concurrently with each
such monthly installment pursuant to the terms hereof and thereof. Provided no
Default or Event of Default has occurred which has not been waived, after the
final scheduled disbursement from the Payment Reserve, any amounts then
remaining in the Payment Reserve shall be paid to Grantor. Nothing contained
herein, including, without limitation, the existence of the Payment Reserve,
shall release Grantor from its obligation to make payments under the Note, this
Deed of Trust or the other Loan Documents strictly in accordance with the terms
hereof or thereof and, in this regard, without limiting the generality of the
foregoing, should the amounts contained in the Payment Reserve not be sufficient
to pay in full the Monthly Payment and the Impound Account, Replacement Reserve
and any other applicable reserve account deposits referenced above in this
subparagraph, Grantor shall be responsible for paying such deficiency on the
Payment Date of such monthly installment.
5.2. Replacement Reserve.
-------------------
(a) As additional security for the Debt, Grantor shall establish and
maintain at all times while this Deed of Trust continues in effect a capital
improvement reserve (the "Replacement Reserve") with Beneficiary for payment of
-------------------
costs and expenses incurred by Grantor in connection with the performance of
work which would normally be treated as a capital improvement under generally
accepted accounting principles (collectively, the "Replacements"). Commencing
------------
on the first Payment Date under the Note and continuing on each Payment Date
thereafter, Grantor shall pay to Beneficiary, in addition to the monthly payment
due under the Note and until the Debt is fully paid and performed, a deposit to
the Replacement Reserve in an amount equal to $ 4,401.00 per month. So long as
no Default or Event of Default has occurred and has not been waived, Beneficiary
shall, to the extent funds are available for such purpose in the Replacement
Reserve, disburse to Grantor the amount paid or incurred by Grantor in
performing Replacements within ten (10) days following: (a) the receipt by
Beneficiary of a written request from Grantor for disbursement from the
Replacement Reserve and a certification by Grantor in a form approved in writing
by Beneficiary that the applicable item of Replacement has been completed; (b)
the delivery to Beneficiary of invoices, receipts or other evidence satisfactory
to Beneficiary, verifying the cost of performing the Replacements; (c) for
disbursement requests in excess of $10,000, the delivery to Beneficiary of
affidavits, lien waivers or other evidence reasonably satisfactory to
Beneficiary showing that all parties who might or could claim statutory or
common law liens and are furnishing or have furnished material or labor to the
Mortgaged Property have been paid all amounts due for labor and materials
furnished to the Mortgaged Property; (d) for disbursement requests in excess of
$10,000, delivery to Beneficiary of a certification from an inspecting architect
or other third party acceptable to Beneficiary describing the completed
Replacements and verifying the completion of the Replacements and the value of
the completed Replacements; and (e) for disbursement requests in excess of
$50,000, delivery to Beneficiary of a new certificate of occupancy for the
portion of the Improvements covered by such Replacements, if said new
certificate of occupancy is required by law, or a certification by Grantor that
no new certificate of occupancy is required. Beneficiary shall not be required
to make advances from the Replacement Reserve more frequently than once in any
ninety (90) day period. In making any payment from the Replacement Reserve,
Beneficiary shall be entitled to rely on such request from Grantor without any
inquiry into the accuracy, validity or contestability of any such amount.
Beneficiary
may, at Grantor's expense, make or cause to be made during the term
of this Deed of Trust an annual inspection of the Mortgaged Property to
determine the need, as determined by Beneficiary in its reasonable judgment, for
further Replacements of the Mortgaged Property; such inspection to be no more
frequent than once in any calendar year unless a Default or an Event of Default
shall have occurred and not been waived. In the event that such inspection
reveals that further Replacements of the Mortgaged Property are required,
Beneficiary shall provide Grantor with a written description of the required
Replacements and Grantor shall complete such Replacements to the reasonable
satisfaction of Beneficiary within ninety (90) days after the receipt of such
description from Beneficiary, or such later date as may be approved by
Beneficiary in its sole discretion.
(b) Beneficiary shall cause funds in the Replacement Reserve to be
deposited into interest bearing accounts of the type customarily maintained by
Beneficiary or its servicing agent for the investment of similar reserves, which
accounts may not yield the highest interest rate then available. Interest
payable on such amounts shall be computed based on the daily outstanding balance
in the Replacement Reserve. Such interest shall be calculated on a simple, non-
compounded interest basis based solely on contributions made to the Replacement
Reserve by Grantor. All interest earned on amounts contributed to the
Replacement Reserve shall be retained by Beneficiary and accumulated for the
benefit of Grantor and added to the balance in the Replacement Reserve and shall
be disbursed for payment of the items for which other funds in the Replacement
Reserve are to be disbursed.
(c) As additional security for the payment and performance by Grantor
of all duties, responsibilities and obligations under the Note, this Deed of
Trust and the other Loan Documents, Grantor hereby unconditionally and
irrevocably assigns and pledges to Beneficiary, and hereby grants to Beneficiary
a security interest in, (i) the Impound Account, the Payment Reserve, the
Replacement Reserve, and any other reserve or escrow account established
pursuant to the terms hereof or of any other Loan Document (collectively, the
"Reserves"), (ii) all insurance on said accounts, (iii) all accounts, contract
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rights and general intangibles or other rights and interests pertaining thereto,
(iv) all replacements, substitutions or proceeds thereof, (v) all instruments
and documents now or hereafter evidencing the Reserves or such accounts, (vi)
all powers, options, rights, privileges and immunities pertaining to the
Reserves (including the right to make withdrawals therefrom) and (vii) all
replacements, substitutions and all proceeds of the foregoing. Grantor hereby
authorizes and consents to each account into which the Reserves have been
deposited being held in Beneficiary's name or the name of any entity servicing
the loan evidenced by the Note for Beneficiary and hereby acknowledges and
agrees that Beneficiary, or at Beneficiary's election, such servicing agent,
shall have exclusive control over each account. Notice of the assignment and
security interest granted to Beneficiary herein may be delivered by Beneficiary
at any time to the financial institutions wherein the Reserves have been
established, and Beneficiary, or such servicing entity, shall have possession of
all passbooks or other evidences of such accounts. Grantor hereby assumes all
risk of loss with respect to amounts on deposit in the Reserves other than any
such loss resulting solely from the willful misconduct of Beneficiary as finally
determined by a court of competent jurisdiction. Grantor hereby knowingly,
voluntarily and intentionally stipulates, acknowledges and agrees that the
advancement of the funds from the Reserves as set forth herein is at Grantor's
direction and is not the exercise by Beneficiary of any right of set-off or
other remedy upon a Default or an Event of Default. Grantor hereby waives all
right to withdraw funds from the Reserves except as provided for in this Deed of
Trust. If an Event of Default shall occur hereunder or under any other of the
Loan Documents which is not waived, Beneficiary may, without notice or demand on
Grantor, at its option: (A) withdraw any or all of the funds (including,
without limitation, interest) then remaining in the Reserves and apply the same,
after
deducting all costs and expenses of safekeeping, collection and delivery
(including, but not limited to, reasonable attorneys' fees, costs and expenses)
to the Debt or any other obligations of Grantor under the other Loan Documents
in such manner as Beneficiary shall deem appropriate in its sole discretion, and
the excess, if any, shall be paid to Grantor, (B) exercise any and all rights
and remedies of a secured party under any applicable Uniform Commercial Code or
(C) exercise any other remedies available at law or in equity. No such use or
application of the funds contained in the Reserves shall be deemed to cure any
Default or Event of Default.
(d) The Reserves shall not, unless otherwise explicitly required by
applicable law, be or be deemed to be escrow or trust funds, but, at
Beneficiary's option and in Beneficiary's discretion, may either be held in a
separate account or be commingled by Beneficiary with the general funds of
Beneficiary. Upon assignment of this Deed of Trust by Beneficiary, any funds in
the Reserves shall be turned over to the assignee and any responsibility of
Beneficiary, as assignor, with respect thereto shall terminate. If the funds in
the applicable Reserve shall exceed the amount of payments actually applied by
Beneficiary for the purposes and items for which the applicable Reserve is held,
such excess may be credited by Beneficiary on subsequent payments to be made
hereunder or, at the option of Beneficiary, refunded to Grantor. If, however,
the applicable Reserve shall not contain sufficient funds to pay the sums
required by the dates on which such sums are required to be on deposit in such
account, Grantor shall, within ten (10) days after receipt of written notice
thereof, deposit with Beneficiary the full amount of any such deficiency. If
Grantor shall fail to deposit with Beneficiary the full amount of such
deficiency as provided above, Beneficiary shall have the option, but not the
obligation, to make such deposit.
5.3. Intentionally Omitted
---------------------
ARTICLE VI.
RENTS; LEASES; ALIENATION
-------------------------
6.1. Rents and Profits. As additional and collateral security for the
-----------------
payment of the Debt and cumulative of any and all rights and remedies herein
provided for, Grantor hereby absolutely and presently assigns to Beneficiary all
existing and future Rents and Profits. Grantor hereby grants to Beneficiary the
sole, exclusive and immediate right, without taking possession of the Mortgaged
Property, to demand, collect (by suit or otherwise), receive and give valid and
sufficient receipts for any and all of said Rents and Profits, for which purpose
Grantor does hereby irrevocably make, constitute and appoint Beneficiary its
attorney-in-fact with full power to appoint substitutes or a trustee to
accomplish such purpose. Beneficiary shall be without liability for any loss
which may arise from a failure or inability to collect Rents and Profits,
proceeds or other payments. However, until the occurrence of an Event of
Default under this Deed of Trust or under any other of the Loan Documents,
Grantor shall have a license to collect, receive, use and enjoy the Rents and
Profits when due and prepayments thereof for not more than one (1) month prior
to due date thereof. The assignment of Rents and Profits hereinabove granted
shall continue in full force and effect during any period of foreclosure or
redemption with respect to the Mortgaged Property. Grantor has executed an
Assignment of Leases and Rents dated of even date herewith (the "Assignment") in
----------
favor of Beneficiary covering all of the right, title and interest of Grantor,
as landlord, lessor or licensor, in and to any Leases. All rights and remedies
granted to Beneficiary under the Assignment shall be in addition to and
cumulative of all rights and remedies granted to Beneficiary hereunder.
6.2. Leases.
------
(a) With the exception of the Lease executed between the Grantor and
Assisted Living Concepts Inc. as of the same date hereof, Grantor covenants and
agrees that it shall not enter into any Lease affecting the lesser of (x) ten
percent (10%) of the gross leaseable area of the Improvements and (y) 10,000
square feet or more of the Mortgaged Property or having a term of ten (10) years
or more without the prior written approval of Beneficiary, which approval shall
not be unreasonably withheld. The request for approval of each such proposed
new Lease shall be made to Beneficiary in writing and Grantor shall furnish to
Beneficiary (and any loan servicer specified from time to time by Beneficiary):
(i) such biographical and financial information about the proposed Tenant as
Beneficiary may require in conjunction with its review, (ii) a copy of the
proposed form of Lease and (iii) a summary of the material terms of such
proposed Lease (including, without limitation, rental terms and the term of the
proposed lease and any options). It is acknowledged that Beneficiary intends to
include among its criteria for approval of any such proposed Lease the
following: (i) such Lease shall be with a bona-fide arm's-length Tenant; (ii)
the terms of such Lease shall comply with the requirements set forth in
paragraphs (b) and (c) below; and (iii) such Lease shall provide that the Tenant
pays for its expenses. Failure of Beneficiary to approve or disapprove any such
proposed Lease within fifteen (15) business days after receipt of such written
request and all the documents and information required to be furnished to
Beneficiary with such request shall be deemed approved, provided that the
written request for approval specifically mentioned the same.
(b) Prior to execution of any Leases of space in the Improvements
after the date hereof, Grantor shall submit to Beneficiary, for Beneficiary's
prior approval, which approval shall not be unreasonably withheld, a copy of the
form Lease Grantor plans to use in leasing space in the Improvements or at the
Mortgaged Property. All such Leases of space at the Mortgaged Property shall be
at a rental and on terms consistent with the terms for similar leases in the
market area of the Premises. Grantor shall also submit to Beneficiary for
Beneficiary's approval, which approval shall not be unreasonably withheld, prior
to the
18
execution thereof, any proposed Lease of the Improvements or any portion
thereof that differs materially and adversely from the aforementioned form
Lease. Grantor shall not execute any Lease for all or a substantial portion of
the Mortgaged Property, except for an actual occupancy by the Tenant, lessee or
licensee thereunder, and shall at all times promptly and faithfully perform, or
cause to be performed, all of the covenants, conditions and agreements contained
in all Leases with respect to the Mortgaged Property, now or hereafter existing,
on the part of the landlord, lessor or licensor thereunder to be kept and
performed. Grantor shall furnish to Beneficiary, within ten (10) days after a
request by Beneficiary to do so, but in any event by January 1 of each year, a
current Rent Roll, certified by Grantor as being true and correct, containing
the names of all Tenants with respect to the Mortgaged Property, the terms of
their respective Leases, the spaces occupied and the rentals or fees payable
thereunder and the amount of each Tenant's security deposit. Upon the request
of Beneficiary, Grantor shall deliver to Beneficiary a copy of each such Lease.
Grantor shall not do or suffer to be done any act, or omit to take any action,
that might result in a default by the landlord, lessor or licensor under any
such Lease or allow the Tenant thereunder to withhold payment of rent or cancel
or terminate same and shall not further assign any such Lease or any such Rents
and Profits. Grantor, at no cost or expense to Beneficiary, shall enforce,
short of termination, the performance and observance of each and every condition
and covenant of each of the parties under such Leases and Grantor shall not
anticipate, discount, release, waive, compromise or otherwise discharge any rent
payable under any of the Leases. Grantor shall not, without the prior written
consent of Beneficiary, modify any of the Leases, terminate or accept the
surrender of any Leases, waive or release any other party from the performance
or observance of any obligation or condition under such Leases except, with
respect only to Leases affecting less than the lesser of (x) ten percent (10%)
of the gross leaseable area of the Improvements and (y) 10,000 square feet and
having a term of less than ten (10) years, in the normal course of business in a
manner which is consistent with sound and customary leasing and management
practices for similar properties in the community in which the Mortgaged
Property is located. Grantor shall not permit the prepayment of any rents under
any of the Leases for more than one (1) month prior to the due date thereof.
(c) Each Lease executed after the date hereof affecting any of the
Premises or the Improvements must provide, in a manner approved by Beneficiary,
that the Lease is subordinate to the lien of this Deed of Trust and that Tenant
will recognize as its landlord, lessor or licensor, as applicable, and attorn to
any person succeeding to the interest of Grantor upon any foreclosure of this
Deed of Trust or deed in lieu of foreclosure. Each such Lease shall also
provide that, upon request of said successor-in-interest, the Tenant shall
execute and deliver an instrument or instruments confirming its attornment as
provided for in this Section; provided, however, that neither Beneficiary nor
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any successor-in-interest shall be bound by any payment of rent for more than
one (1) month in advance, or any amendment or modification of said Lease made
without the express written consent of Beneficiary or said successor-in-
interest.
(d) Each agreement with a resident or occupant for the use and
occupancy of the Premises and the services provided in connection therewith in
keeping with the Health Care Operating License (a "Residency or Occupancy
Agreement") shall be written on the standard form for such document which has
been approved by Beneficiary
19
6.3. Alienation and Further Encumbrances.
-----------------------------------
(a) Grantor acknowledges that Beneficiary has relied upon the
principals of Grantor and their experience in owning and operating the Mortgaged
Property and properties similar to the Mortgaged Property in connection with the
closing of the loan evidenced by the Note. Accordingly, except as specifically
allowed hereinbelow in this Section and notwithstanding anything to the contrary
contained in Section 16.4 hereof, in the event that the Mortgaged Property or
------------
any part thereof or interest therein shall be sold, conveyed, disposed of,
alienated, hypothecated, leased (except to Tenants of space in the Improvements
in accordance with the provisions of Section 6.2 hereof), assigned, pledged,
-----------
mortgaged, further encumbered or otherwise transferred or Grantor shall be
divested of its title to the Mortgaged Property or any interest therein, in any
manner or way, whether voluntarily or involuntarily, without the prior written
consent of Beneficiary being first obtained, which consent may be withheld in
Beneficiary's sole discretion, then the same shall constitute an Event of
Default and Beneficiary shall have the right, at its option, to declare any or
all of the Debt, irrespective of the maturity date specified in the Note,
immediately due and payable and to otherwise exercise any of its other rights
and remedies contained in Article XV hereof. For the purposes of this Section:
----------
(i) in the event either Grantor or any of its general partners or members is a
corporation or trust, the sale, conveyance, transfer or disposition of more than
10% (in one or more related transactions) of the issued and outstanding capital
stock of Grantor or any of its general partners or members or of the beneficial
interest of such trust (or the issuance of new shares of capital stock in
Grantor or any of its general partners or members so that immediately after such
issuance (in one or a series of transactions) the total capital stock then
issued and outstanding is more than 110% of the total immediately prior to such
issuance) shall be deemed to be a transfer of an interest in the Mortgaged
Property; and (ii) in the event Grantor or any general partner or member of
Grantor is a limited or general partnership, a joint venture or a limited
liability company, a direct or indirect change in the ownership interests in
Grantor or any general partner, any joint venturer or any member, either
voluntarily, involuntarily or otherwise, or the sale, conveyance, transfer,
disposition, alienation, hypothecation or encumbering of all or any portion of
the interest of Grantor or any such general partner, joint venturer or member in
Grantor or such general partner or member (whether in the form of a beneficial
or partnership interest or in the form of a power of direction, control or
management, or otherwise), shall be deemed to be a transfer of an interest in
the Mortgaged Property. Notwithstanding the foregoing, however, (i) limited
partnership interests in Grantor or in any general partner or member of Grantor
shall be freely transferable without the consent of Beneficiary, (ii) any
involuntary transfer caused by the death of any general partner, shareholder,
joint venturer, or member of Grantor or any general partner or member of Grantor
or beneficial owner of a trust shall not be an Event of Default under this Deed
of Trust so long as Grantor is reconstituted, if required, following such death
and so long as those persons responsible for the management of the Mortgaged
Property and Grantor remain unchanged as a result of such death or any
replacement management is approved by Beneficiary, (iii) gifts for estate
planning purposes of any individual's interests in Grantor or in any of
Grantor's general partners, members or joint venturers to the spouse or any
lineal descendant of such individual, or to a trust for the benefit of any one
or more of such individual, spouse or lineal descendant, shall not be an Event
of Default under this Deed of Trust so long as Grantor is reconstituted, if
required, following such gift and so long as those persons responsible for the
management of the Mortgaged Property and Grantor remain unchanged following such
gift or any replacement management is approved by Beneficiary, and (iv) any
transfer caused by a change in control or merger or consolidation of the parent
company of any general partner of Grantor shall not be an Event of Default so
long as the parent of such general partner of Grantor is a publicly held
company.
20
(b) Notwithstanding any other provisions of this Deed of Trust,
Beneficiary shall consent to a sale, conveyance or transfer of the Mortgaged
Property in its entirety (hereinafter, a "Sale") to any person or entity
----
provided that, for each Sale, each of the following terms and conditions are
satisfied:
(1) No Default and no Event of Default has occurred hereunder or
under any of the other Loan Documents which has not been waived;
(2) Grantor gives Beneficiary written notice of the terms of such
prospective Sale not less than sixty (60) days before the date on which
such Sale is scheduled to close and, concurrently therewith, gives
Beneficiary all such information concerning the proposed transferee of the
Mortgaged Property (hereinafter, "Buyer") as Beneficiary would require in
-----
evaluating an initial extension of credit to a borrower and pays to
Beneficiary a non-refundable application fee in the amount of $5,000.
Beneficiary shall have the right to approve or disapprove the proposed
Buyer. In determining whether to give or withhold its approval of the
proposed Buyer, Beneficiary shall consider the Buyer's experience and track
record in owning and operating facilities similar to the Mortgaged
Property, the Buyer's financial strength, the Buyer's general business
standing and the Buyer's relationships and experience with contractors,
vendors, tenants, lenders and other business entities; provided, however,
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that, notwithstanding Beneficiary's agreement to consider the foregoing
factors in determining whether to give or withhold such approval, such
approval shall be given or withheld based on what Beneficiary determines to
be commercially reasonable in Beneficiary's sole discretion and, if given,
may be given subject to such conditions as Beneficiary may deem
appropriate;
(3) Grantor pays Beneficiary, concurrently with the closing of
such Sale, a non-refundable assumption fee in an amount equal to all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred by Beneficiary in connection with the Sale, plus
an amount equal to one-half of one percent (0.5%) of the then outstanding
principal balance of the Note;
(4) The Buyer executes, without any cost or expense to
Beneficiary, such documents and agreements as Beneficiary shall reasonably
require in connection with the Sale, including, but not limited to, an
assumption agreement, financing statements, and guaranties or indemnities,
all in form and substance satisfactory to Beneficiary. The Buyer shall also
deliver to Beneficiary such insurance policies and other documents and
certificates as the Beneficiary may require.
(c) Such Sale shall not be construed so as to relieve Grantor of any
personal liability under the Note or any of the other Loan Documents for any
acts or events occurring or obligations arising prior to or simultaneously with
the closing of such Sale, whether or not same is discovered prior or subsequent
to the closing of such Sale. Grantor shall be released from and relieved of any
personal liability under the Note or any of the other Loan Documents for any
acts or events occurring or obligations arising after the closing of such Sale
which are not caused by or arising out of any acts or events occurring or
obligations arising prior to or simultaneously with the closing of such Sale.
6.4. Easements and Rights-of-Way. Grantor shall not grant any easement or
---------------------------
right-of-way with respect to all or any portion of the Premises or the
Improvements without the prior written consent of Beneficiary. The purchaser at
any foreclosure sale hereunder may, at its discretion, disaffirm any easement or
right-of-way granted in violation of any of the
21
provisions of this Deed of Trust and may take immediate possession of the
Mortgaged Property free from, and despite the terms of, such grant of easement
or right-of-way. If Beneficiary consents to the grant of an easement or right-
of-way, Beneficiary agrees to grant such consent without charge to Grantor other
than expenses, including, without limitation, reasonable attorneys' fees,
incurred by Beneficiary in the review of Grantor's request and in the
preparation of documents effecting the subordination.
6.5. Partial Release of Mortgaged Property. Distinct parcels of the
-------------------------------------
Mortgaged Property ("Partial Release Parcels") as identified on Schedule I
------- ---------------
attached hereto and by this reference incorporated herein, may be released from
time to time from the lien of this Deed of Trust (a "Partial Release"), subject
---------------
to satisfaction of all of the following conditions:
(a) Each Partial Release shall be governed by, and subject to the
provisions set forth in Section 12.5 below;
------------
(b) Beneficiary shall have received not less than sixty (60) nor more
than ninety (90) days prior written notice ("Partial Release Notice") specifying
----------------------
the following, (i) a date which shall be a Payment Date ("Partial Release
---------------
Date"), on which to effectuate the Partial Release, (ii) the specified Partial
- ----
Release Parcel(s) which Grantor wishes to have released from the lien of this
Deed of Trust;
(c) On the Partial Release Date, the amount to be paid ("Partial
-------
Release Price") to buy Defeasance Collateral upon a Partial Release and a
- -------------
Partial Defeasance of the Deed of Trust pursuant to this Section and Section
12.5, shall be the product of (1) the Allocated Loan Amount multiplied by (2)
125% multiplied by (3) a fraction whose numerator is the outstanding principal
balance of the Note on the Partial Release Date and whose denominator is the
original outstanding principal balance of the Note;
(d) No Event of Default shall have occurred and be continuing on the
date of the Partial Release Notice or on the Partial Release Date;
(e) Grantor shall, at is sole cost and expense, prepare any and all
documents and instruments necessary to effect the Partial Release, all of which
shall be subject to the reasonable approval of Beneficiary, and shall be
delivered to Beneficiary 30 days prior to the Partial Release Date, and Grantor
shall pay all costs and expenses reasonably incurred by Beneficiary or
Beneficiary's loan servicer (including, but not limited to, reasonable
attorneys' fees and disbursements) in connection with the review, execution and
delivery of the Partial Release;
(f) At the request of Beneficiary, Grantor shall, at Grantor's sole
cost and expense, obtain and deliver all appropriate title endorsements,
supplements and/or additional title insurance policies to or in connection with
Lender's original loan title insurance policy, insuring that the lien of the
Deed of Trust with respect to the portion of the Mortgaged Property remaining
after such Partial Release, is not affected by the Partial Release, and subject
to Beneficiary's reasonable approval.
ARTICLE VII.
PROPERTY MANAGEMENT
-------------------
22
7.1. Management. The management of the Mortgaged Property shall be by
----------
either: (a) Grantor or an entity affiliated with Grantor approved by
Beneficiary for so long as Grantor or said affiliated entity is managing the
Mortgaged Property in a first class manner; or (b) a professional property
management company approved by Beneficiary. Such management by an affiliated
entity or a professional property management company shall be pursuant to a
written agreement approved by Beneficiary. Grantor shall give Beneficiary
prompt written notice of the occurrence of a default under any management
contract then in effect. In no event shall any manager be removed or replaced
or the terms of any management agreement be modified or amended without the
prior written consent of Beneficiary. After an Event of Default or a default
under any management contract then in effect, which default is not cured within
any applicable grace or cure period, Beneficiary shall have the right to
terminate, or to direct Grantor to terminate, such management contract upon
thirty (30) days' notice and to retain, or to direct Grantor to retain, a new
management agent approved by Beneficiary. All Rents and Profits generated by or
derived from the Mortgaged Property shall first be utilized solely for current
expenses directly attributable to the ownership and operation of the Mortgaged
Property, including, without limitation, current expenses relating to Grantor's
liabilities and obligations with respect to this Deed of Trust and the other
Loan Documents, and none of the Rents and Profits generated by or derived from
the Mortgaged Property shall be diverted by Grantor and utilized for any other
purposes unless all such current expenses attributable to the ownership and
operation of the Mortgaged Property have been fully paid and satisfied.
ARTICLE VIII.
INDEMNIFICATION
---------------
8.1. Indemnification; Subrogation.
----------------------------
(a) Grantor shall indemnify, defend and hold Beneficiary harmless from
and against: (i) any and all claims for brokerage, leasing, finders or similar
fees which may be made relating to the Mortgaged Property or the Debt and (ii)
any and all liability, obligations, losses, damages, penalties, claims, actions,
suits, costs and expenses (including Beneficiary's reasonable attorneys' fees
and expenses) of whatever kind or nature which may be asserted against, imposed
on or incurred by Beneficiary in connection with the Debt, this Deed of Trust
and any other Loan Document, the Mortgaged Property, or any part thereof, or the
exercise by Beneficiary of any rights or remedies granted to it under this Deed
of Trust; provided, however, that nothing herein shall be construed to obligate
-------- -------
Grantor to indemnify, defend and hold harmless Beneficiary from and against any
and all liabilities, obligations, losses, damages, penalties, claims, actions,
suits, costs and expenses to the extent enacted against, imposed on or incurred
by Beneficiary solely by reason of Beneficiary's willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantor hereby indemnifies and holds Beneficiary harmless from and
against all loss, cost and expenses with respect to any Event of Default hereof,
any liens (i.e., judgments, mechanics' and materialmen's liens, or otherwise),
charges and encumbrances filed against the Mortgaged Property, and from any
claims and demands for damages or injury, including claims for property damage,
personal injury or wrongful death, arising out of or in connection with any
accident or fire or other casualty on the Premises or the Improvements or any
nuisance made or suffered thereon, except to the extent due solely to
Beneficiary's willful misconduct as finally determined by a court of competent
jurisdiction, including, without limitation, in any case, reasonable attorneys'
fees, costs and expenses as aforesaid, whether at pretrial, trial or appellate
level, and such indemnity shall survive payment in full of the Debt.
23
This Section shall not be construed to require Beneficiary to incur any
expenses, make any appearances or take any actions.
(c) If Beneficiary is made a party defendant to any litigation or any
claim is threatened or brought against Beneficiary concerning the Debt, this
Deed of Trust, the Mortgaged Property, or any part thereof, or any interest
therein, or the construction, maintenance, operation or occupancy or use
thereof, then Grantor shall indemnify, defend and hold Beneficiary harmless from
and against all liability by reason of said litigation or claims, including
reasonable attorneys' fees and expenses incurred by Beneficiary in any such
litigation or claim, whether or not any such litigation or claim is prosecuted
to judgment. If Beneficiary commences an action against Grantor to enforce any
of the terms hereof or to prosecute any breach by Grantor of any of the terms
hereof or to recover any sum secured hereby, Grantor shall pay to Beneficiary
the reasonable attorneys' fees and expenses incurred by Beneficiary in
connection therewith. The right to such attorneys' fees and expenses shall be
deemed to have accrued on the commencement of such action, and shall be
enforceable whether or not such action is prosecuted to judgment. If Grantor
breaches any term of this Deed of Trust or any other Loan Document, Beneficiary
may engage the services of an attorney or attorneys to protect its rights
hereunder, and in the event of such engagement following any breach by Grantor,
Grantor shall pay Beneficiary reasonable attorneys' fees and expenses incurred
by Beneficiary, whether or not an action is actually commenced against Grantor
by reason of such breach. All references to "attorneys" in this Subsection and
---------
elsewhere in this Deed of Trust shall include, without limitation, any attorney
or law firm engaged by Beneficiary and Beneficiary's in-house counsel, and all
references to "fees and expenses" in this Subsection and elsewhere in this Deed
-----------------
of Trust shall include, without limitation, any reasonable fees of such attorney
or law firm, any reasonable appellate counsel fees, if applicable, and any
reasonable allocation charges and reasonable allocation costs of Beneficiary's
in-house counsel.
(d) A waiver of subrogation shall be obtained by Grantor from its
insurance carrier and, consequently, Grantor waives any and all right to claim
or recover against Beneficiary, its officers, employees, agents and
representatives, for loss of or damage to Grantor, the Mortgaged Property,
Grantor's property or the property of others under Grantor's control from any
cause insured against or required to be insured against by the provisions of
this Deed of Trust.
ARTICLE IX.
REPORTING
---------
9.1. Access Privileges and Inspections. Beneficiary and the agents,
---------------------------------
representatives and employees of Beneficiary shall, subject to the rights of
Tenants, have full and free access to the Premises and the Improvements and any
other location where books and records concerning the Mortgaged Property are
kept at all reasonable times and, except in the event of an emergency, upon not
less than 24 hours prior notice (which notice may be telephonic) for the
purposes of inspecting the Mortgaged Property and of examining, copying and
making extracts from the books and records of Grantor relating to the Mortgaged
Property. Grantor shall lend assistance to all such agents, representatives and
employees of Beneficiary.
9.2. Financial Statements and Books and Records. Grantor shall keep
------------------------------------------
accurate books and records of account of the Mortgaged Property and its own
financial affairs sufficient to permit the preparation of financial statements
therefrom in accordance with generally accepted accounting principles.
Beneficiary and its duly authorized representatives shall have the right to
24
examine, copy and audit Grantor's records and books of account at all reasonable
times. So long as this Deed of Trust continues in effect, Grantor shall provide
to Beneficiary, in addition to any other financial statements required hereunder
or under any of the other Loan Documents, the following financial statements and
information, all of which shall be in the form and substance acceptable to
Beneficiary and all of which must be certified to Beneficiary as being true and
correct by Grantor or the person or entity to which they pertain, as applicable.
With respect to the financial statements and information set forth in subsection
(d) hereof as it relates to Grantor or the Mortgaged Property, the same must be
prepared by an certified public accountant in accordance with generally accepted
accounting principles consistently applied and, if the original principal amount
of the Note is $15,000,000 or more, the same must be audited by such
accountants:
(a) copies of all tax returns filed by Grantor, within thirty (30)
days after the date of filing;
(b) monthly operating statements for the Mortgaged Property, within
fifteen (15) days after the end of each three calendar month period, the first
such period to commence on the first day of the month following the date hereof;
and
(c) quarterly operating statements for the Mortgaged Property, within
thirty (30) days after the end of each March, June, September and December
commencing with the first (1st) of such months to occur following the first
(1st) anniversary of the date hereof;
(d) annual balance sheets for the Mortgaged Property and annual
financial statements for Grantor, each principal or general partner in Grantor,
and each Indemnitor, within ninety (90) days after the end of each calendar
year; including, without limitation, a schedule of rates for each room and payor
type, copies of the Medicare and Medicaid cost reports, as applicable copies of
filings with the Department of Health and/or any other regulatory agency which
sets or establishes reimbursement rates promptly upon filing with any
Governmental Entity and in any event, within five (5) business days of such
filing, copies of all Health Care Operating License applications (including
renewal applications) and/or similar filings and submitted by or on behalf of
Grantor; and
(e) such other information with respect to the Mortgaged Property,
Grantor, the principals or general partners in Grantor, and each Indemnitor,
which may be reasonably requested from time to time by Beneficiary, within a
reasonable time after the applicable request.
In the event of any failure to timely provide any of the statements or other
materials referred to above in this Section 9.2 or in the event any such
-----------
statements or other materials shall be materially inaccurate or false, or in the
event of the failure of Grantor to permit Beneficiary or its representatives to
inspect said books and records upon request, an Event of Default shall
automatically exist hereunder without any notice to, or right to cure by,
Grantor. In addition to the provisions of the immediately preceding sentence,
upon each failure of Grantor to provide any of the statements or other materials
referred to above in this Section 9.2, Grantor shall, in Beneficiary 's sole and
-----------
absolute discretion, be subject to a charge in the amount of One Thousand and
00/100 Dollars ($1,000.00) which amount shall be paid to Beneficiary, together
with interest thereon at the Default Interest Rate from the date that the
applicable statement or other material was required to be delivered to
Beneficiary until the date such amount is paid to it, immediately on demand by
Beneficiary.
25
ARTICLE X.
WARRANTIES AND COVENANTS
------------------------
10.1. Warranties of Grantor. Grantor, for itself and its successors and
---------------------
assigns, does hereby represent, warrant and covenant to and with Beneficiary,
its successors and assigns, that:
(a) Grantor has good, and indefeasible fee simple title to the
Mortgaged Property, subject only to those matters expressly set forth as
exceptions to title or subordinate matters in the title insurance policy
insuring the lien of this Deed of Trust which Beneficiary has agreed to accept
(such items being the "Permitted Encumbrances"), and has full power and lawful
----------------------
authority to Deed of Trust its interest in the Mortgaged Property in the manner
and form hereby done or intended. Grantor will preserve its interest in and
title to the Mortgaged Property and will forever warrant and defend the same to
Beneficiary against any and all claims whatsoever and will forever warrant and
defend the validity and priority of the lien and security interest created
herein against the claims of all persons and parties whomsoever, subject to the
Permitted Encumbrances. The foregoing warranty of title shall survive the
foreclosure of this Deed of Trust and shall inure to the benefit of and be
enforceable by Beneficiary in the event Beneficiary acquires title to the
Mortgaged Property by foreclosure or otherwise;
(b) No bankruptcy, reorganization or insolvency proceedings are
pending or contemplated either by Grantor or, to the best knowledge of Grantor,
against Grantor (or, if Grantor is a partnership or a limited liability company,
any of its general partners or members) or by or against any endorser or
cosigner of the Note or of any portion of the Debt, or any guarantor or
indemnitor under any guaranty or indemnity agreement executed in connection with
the Note or the loan evidenced thereby and secured hereby (an "Indemnitor");
----------
(c) All reports, certificates, affidavits, statements and other data
furnished by or on behalf of Grantor to Beneficiary in connection with the loan
evidenced by the Note are true and correct in all material respects and do not
omit to state any fact or circumstance necessary to make the statements
contained therein not misleading;
(d) The execution, delivery and performance of this Deed of Trust, the
Note and all of the other Loan Documents have been duly authorized by all
necessary action to be, and are, binding and enforceable against Grantor in
accordance with the respective terms thereof and do not (i) contravene, result
in a breach of or constitute a default (nor upon the giving of notice or the
passage of time or both will the same constitute a default) under the
organizational documents of Grantor or any contract or agreement of any nature
to which Grantor is a party or by which Grantor or any of its property may be
bound or (ii) violate or contravene any law, order, decree, rule or regulation
to which Grantor is subject;
(e) There are no judicial, administrative, mediation or arbitration
actions, suits or proceedings pending or threatened against or affecting Grantor
(or, if Grantor is a partnership or a limited liability company, any of its
general partners or members) or the Mortgaged Property which, if adversely
determined, would materially impair either the Mortgaged Property or Grantor's
ability to perform the covenants or obligations required to be performed under
the Loan Documents;
(f) Grantor possesses all franchises, patents, copyrights, trademarks,
trade names, licenses and permits (the "Licenses") necessary for the conduct of
--------
its business substantially as now conducted, including, without limitation, all
necessary federal, state and
26
local certificates, permits, licenses, approvals, registrations and
authorizations required to permit Grantor to conduct its operations at the
Mortgaged Property, all fees due and payable in connection with such Licenses
have been paid and Grantor's operation of the Premises complies with such
Licenses;
(g) Grantor is not a "foreign person" within the meaning of
(S)1445(f)(3) of the Internal Revenue Code of 1986, as amended, and the related
Treasury Department regulations, including temporary regulations;
(h) The Premises and the Improvements and the current intended use
thereof by Grantor comply in all material respects with all applicable
restrictive covenants, zoning ordinances, subdivision and building codes, flood
disaster laws, health and environmental laws and regulations and all other
ordinances, orders or requirements issued by any state, federal or municipal
authorities having or claiming jurisdiction over the Mortgaged Property. The
Premises and Improvements constitute one or more separate tax parcels for
purposes of ad valorem taxation. The Premises and Improvements do not require
any rights over, or restrictions against, other property in order to comply with
any of the aforesaid governmental ordinances, orders or requirements;
(i) All utility services necessary and sufficient for the full use,
occupancy, operation and disposition of the Premises and the Improvements for
their intended purposes are available to the Mortgaged Property, including
water, storm sewer, sanitary sewer, gas, electric, cable and telephone
facilities, through public rights-of-way or perpetual private easements approved
by Beneficiary;
(j) All streets, roads, highways, bridges, curb cuts, driveways and
traffic signals and waterways necessary for access to and full use, occupancy,
operation and disposition of the Premises and the Improvements have been
completed, have been dedicated to and accepted by the appropriate municipal
authority and are open and available to the Premises and the Improvements
without further condition or cost to Grantor;
(k) The Mortgaged Property is free from delinquent water charges,
sewer rents, taxes and assessments;
(l) As of the date of this Deed of Trust, the Mortgaged Property is
free from unrepaired damage caused by fire, flood, accident or other casualty
(except as disclosed in the Engineering Report); all insurance required by the
terms of this Deed of Trust is in full force and effect and none of the premiums
payable therefor have been, nor at any time in the future will be financed;
(m) As of the date of this Deed of Trust, no part of the Premises or
the Improvements has been taken in condemnation, eminent domain or like
proceeding nor is any such proceeding pending or, to Grantor's knowledge and
belief, threatened or contemplated;
(n) Except as may otherwise be disclosed in the Engineering Report,
the Improvements are structurally sound, in good repair and free of defects in
materials and workmanship. Except as may otherwise be disclosed in the
Engineering Report, all major building systems located within the Improvements,
including, without limitation, the heating and air conditioning systems and the
electrical and plumbing systems, are in good working order and condition;
27
(o) Grantor has delivered to Beneficiary true, correct and complete
copies of all Contracts and all amendments thereto or modifications thereof;
(p) Each Contract constitutes the legal, valid and binding obligation
of Grantor and, to the best of Grantor's knowledge and belief, is enforceable
against all other parties thereto. No default exists, or with the passing of
time or the giving of notice or both would exist, under any Contract or
Contracts which would, individually or in the aggregate, have a material adverse
effect on Grantor or the Mortgaged Property;
(q) No Contract or Lease provides any party with the right to obtain a
lien or encumbrance upon the Mortgaged Property superior to the lien of this
Deed of Trust;
(r) Grantor and the Mortgaged Property are free from any past due
obligations for sales and payroll taxes;
(s) There are no security agreements or financing statements affecting
all or any portion of the Mortgaged Property other than (i) as disclosed in
writing by Grantor to Beneficiary prior to the date hereof and (ii) the security
agreements and financing statements created in favor of Beneficiary;
(t) Grantor has delivered a true, correct and complete schedule (the
"Rent Roll") of all Leases affecting the Mortgaged Property as of the date
- ----------
hereof, which accurately and completely sets forth in all material respects for
each such Lease the name of the Tenant, the Lease expiration date, extension and
renewal provisions, the base rent payable, the security deposit held thereunder
and any other material provisions of such Lease; and Grantor has delivered to
Beneficiary true, correct and complete copies of all Leases described in the
Rent Roll;
(u) Each Lease constitutes the legal, valid and binding obligation of
Grantor and, to the best of Grantor's knowledge and belief, is enforceable
against the Tenant thereunder. No default has been asserted or exists, or with
the passing of time or the giving of notice or both would exist, under any Lease
which would, in the aggregate, have a material adverse effect on Grantor or the
Mortgaged Property;
(v) No Tenant under any Lease has, as of the date hereof, paid rent
more than thirty (30) days in advance, and the rents under such Leases have not
been waived, released, or otherwise discharged or compromised;
(w) All work to be performed by Grantor under the Leases has been
substantially performed, all contributions to be made by Grantor to the Tenants
thereunder have been made and all other conditions precedent to each such
Tenant's obligations thereunder have been satisfied;
(x) Each Tenant under any Lease has entered into occupancy of the
demised premises; and
(y) To the best of Grantor's knowledge and belief, each Tenant is free
from bankruptcy, reorganization, insolvency or arrangement proceedings or a
general assignment for the benefit of creditors.
28
10.2. Waste; Alteration of Improvements. Grantor shall not commit, suffer
---------------------------------
or permit any waste on the Mortgaged Property nor take or fail to take any
actions that might invalidate any insurance carried on the Mortgaged Property.
Grantor shall maintain the Mortgaged Property in good condition and repair. No
part of the Improvements may be removed, demolished or materially altered,
without the prior written consent of Beneficiary. Without the prior written
consent of Beneficiary, Grantor shall not commence construction of any
improvements on the Premises other than improvements required for the
maintenance or repair of the Mortgaged Property. Not withstanding the
foregoing, Beneficiary acknowledges that Assisted Living Concepts Inc., the
tenant at the Premises, may expand the facilities at each or any of the
Premises, at Tenant's sole cost and expense, and tenant shall retain the
revenues from the expansion.
10.3. Zoning. Without the prior written consent of Beneficiary, Grantor
------
shall not make, suffer, consent to or acquiesce in any change in the zoning or
conditions of use of the Premises or the Improvements. Grantor shall comply
with and make all payments required under the provisions of any covenants,
conditions or restrictions affecting the Premises or the Improvements. Grantor
shall comply with all existing and future requirements of all governmental
authorities having jurisdiction over the Mortgaged Property. Grantor shall keep
all licenses, permits, franchises and other approvals necessary for the
operation of the Mortgaged Property in full force and effect. Grantor shall
operate the Mortgaged Property as a assisted care facility for so long as the
Debt is outstanding. If, under applicable zoning provisions, the use of all or
any part of the Premises or the Improvements is or becomes a nonconforming use,
Grantor shall not cause or permit such use to be discontinued or abandoned
without the prior written consent of Beneficiary. Further, without
Beneficiary's prior written consent, Grantor shall not file or subject any part
of the Premises or the Improvements to any declaration of condominium or co-
operative or convert any part of the Premises or the Improvements to a
condominium, co-operative or other form of multiple ownership and governance.
10.4. Covenants with Respect to Indebtedness, Operations, Fundamental
---------------------------------------------------------------
Changes of Grantor. Grantor hereby represents, warrants and covenants as of the
- ------------------
date hereof and until such time as the Debt is paid in full, that Grantor:
(a) will not, nor will any partner, limited or general, member or
shareholder thereof, as applicable, amend, modify or otherwise change its
partnership certificate, partnership agreement, articles of incorporation, by-
laws, operating agreement, articles of organization or other formation agreement
or document, as applicable, in any material term or manner, or in a manner which
adversely affects Grantor's existence as a single purpose entity;
(b) will not liquidate or dissolve (or suffer any liquidation or
dissolution), or enter into any transaction of merger or consolidation, or
acquire by purchase or otherwise all or substantially all or any part of the
business or assets of, or any stock or other evidence of beneficial ownership
of, or make any investment in, any entity;
(c) has not and will not guarantee, pledge its assets for the benefit
of, or otherwise become liable on or in connection with, any obligation of any
other person or entity;
(d) does not own and will not own any asset other than (i) the
Mortgaged Property, and (ii) incidental personal property necessary for the
operation of the Mortgaged Property;
29
(e) is not engaged and will not engage, either directly or indirectly,
in any business other than the ownership, management and operation of the
Mortgaged Property;
(f) will not enter into any contract or agreement with any general
partner, principal, affiliate or member of Grantor, as applicable, or any
affiliate of any general partner, principal or member of Grantor, except upon
terms and conditions that are intrinsically fair and substantially similar to
those that would be available on an arms-length basis with unrelated third
parties;
(g) has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (i) the Debt, (ii) advances from affiliates, partners or members, as
applicable, of Grantor, provided the same are fully subordinated to the payment
in full of the Debt in a manner acceptable to Beneficiary and (iii) trade
payables or accrued expenses incurred in the ordinary course of the business of
operating the Mortgaged Property, and no debt other than the Debt will be
secured (senior, subordinate or pari passu) by the Mortgaged Property;
(h) has not made and will not make any loans or advances to any third
party (including any affiliate);
(i) is and will be solvent and pay its debts from its assets as the
same shall become due;
(j) has done or caused to be done and will do all things necessary to
preserve its existence, and will observe all formalities applicable to it;
(k) will conduct and operate its business in its own name and as
presently conducted and operated;
(l) will maintain financial statements, books and records and bank
accounts separate from those of its affiliates, including, without limitation,
its general partners or members, as applicable;
(m) will be, and at all times will hold itself out to the public as, a
legal entity separate and distinct from any other entity (including, without
limitation, any affiliate, general partner, or member, as applicable, or any
affiliate of any general partner or member of Grantor, as applicable);
(n) will file its own tax returns;
(o) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;
(p) will establish and maintain an office through which its business
will be conducted separate and apart from those of its affiliates or, if it
shares office space with its affiliates, shall allocate fairly and reasonably
any overhead and expense for shared office space;
(q) will not commingle the funds and other assets of Grantor with
those of any general partner, member, affiliate, principal or any other person;
30
(r) has and will maintain its assets in such a manner that it is not
costly or difficult to segregate, ascertain or identify its individual assets
from those of any affiliate or any other person;
(s) does not and will not hold itself out to be responsible for the
debts or obligations of any other person;
(t) will pay any liabilities including salaries of its employees, out
of its own funds and not funds of any affiliate;
(u) will use stationery, invoices, and checks separate from its
affiliates ; and.
10.5. Accounts Receivable Financing. Notwithstanding any other provision
-----------------------------
herein to the contrary, Beneficiary consents to the sale, assignment, pledge or
other encumbrance of all or any portion of the Mortgaged Property constituting
the Accounts Receivable existing on the date conveyed or financed to any person
or entity (an "Accounts Receivable Acquiror") and, in connection therewith,
Beneficiary hereby agrees that it will subordinate the lien created hereunder
solely with respect to the portion of the Mortgaged Property constituting the
existing Accounts Receivable to any lien or interest of any Accounts Receivable
Acquiror; provided, however, that such consent and subordination shall be
limited to, and effective only with respect to liens created upon, or sales with
respect to, then existing Accounts Receivable pledged or sold prior to the date
on which Beneficiary has notified such Accounts Receivable Acquiror that
Beneficiary has commenced an enforcement action with respect to any other
portion of the Mortgaged Property, and provided further that each of the
following terms and conditions are first satisfied:
(a) No Default or Event of Default has occurred and is continuing;
(b) Grantor gives Beneficiary written notice of the terms of any such
sale or pledge (an "A/R Financing") not less than thirty (30) days prior to
the date such A/R Financing is scheduled to close and provides Beneficiary
with forms of all documents and instruments evidencing such A/R Financing
(the "A/R Financing Documents"), not less than seven (7) days prior to the
date such A/R Financing is scheduled to close in order for Beneficiary to
determine compliance with the provisions hereof;
(c) Contemporaneously with the closing of any such A/R Financing, or
with the closing of the loan secured hereby if any A/R Financing is in
place on the date hereof, the Accounts Receivable Acquiror shall pay to
Beneficiary, on behalf of Grantor, out of the proceeds of the conveyance to
such acquiror of Accounts Receivable, as a reserve hereunder, an amount
determined by multiplying a fraction, the numerator of which is the
aggregate face amount of the Accounts Receivable conveyed or pledged to the
Accounts Receivable Acquiror and the denominator of which is the applicable
MAGR (as defined below) multiplied by an amount equal to the sum of: (i)
the monthly installment payment of principal and interest due and payable
by Grantor under the Note, (ii) the amount required to be deposited into
the Impound Account each month pursuant to the terms of Section 1.2 hereof,
and (iii) the amount required to be deposited in the Replacement Reserve
each month. For purposes of this Section, as of any date of determination,
a "MAGR" is an amount equal to the monthly average gross revenue (computed
on a 12-month rolling average basis for the 12 months preceding the month
in which such date of determination occurs) of Grantor from the Mortgaged
Property;
31
(d) On or before the closing of any such A/R Financing, Grantor shall
have delivered to Beneficiary a certificate certifying as to the face
amount of the Accounts Receivable being conveyed or pledged and the amount
of the applicable MAGR, together with any related data and the calculations
used to establish the MAGR, all in reasonable detail and satisfactory to
Beneficiary;
(e) The Accounts Receivable Acquirer shall agree pursuant to a binding
written agreement enforceable by Beneficiary that (i) except as otherwise
expressly provided herein, the liens of the A/R Financing Documents shall
be subordinate to the lien of the Loan Documents and all modifications,
renewals, refinancings, replacements and extensions whatsoever of any of
the Loan Documents, (ii) the A/R Financing Documents shall at all times
incorporate by reference such written agreement and provide for such
subordination automatically, and without any notice to, consent of, or
action by the Accounts Receivable Acquiror or any other party whatsoever,
(iii) no release or waiver by Beneficiary or any subsequent holder of this
Deed of Trust of any of its rights against any person or entity under the
Loan Documents, as the same may be modified, renewed, replaced (including a
replacement upon a refinancing) or extended, shall require notice to or
consent of the Accounts Receivable Acquiror or any other party, nor shall
any such release or waiver operate as a defense to or release of any of the
obligations of Accounts Receivable Acquiror or the rights of Beneficiary or
any other subsequent holder of this Deed of Trust or the other Loan
Documents, as the same may be modified, renewed, replaced (including a
replacement upon a refinancing) or extended, and (iii) without limiting the
generality of any of the foregoing, the Accounts Receivable Acquiror
thereby consents to any increases of the indebtedness owed by Grantor under
the Loan Documents, as the same may be modified, renewed, replaced
(including a replacement upon a refinancing) or extended;
(f) The A/R Financing Documents shall also provide that without the
prior written consent of Beneficiary or any subsequent holder of this Deed
of Trust, the Accounts Receivable Acquiror shall not take an enforcement
action under any A/R Financing Document with respect to any collateral as
to which it shall hold a lien subordinate in priority to the lien created
by the Loan Documents unless all indebtedness secured by the Loan
Documents, as the same may be modified, renewed, replaced (including a
replacement upon a refinancing) or extended shall have been indefeasibly
satisfied in full, that the Accounts Receivable Acquiror shall not assert
any default under the A/R Financing Documents as a result of Grantor's
compliance with the terms of any of the Loan Documents, as the same may be
modified, renewed, replaced (including a replacement upon a refinancing) or
extended from time to time, and that the provisions of the Loan Documents,
as the same may be modified, renewed, replaced (including replacement upon
a refinancing) or extended shall govern with respect to any conflicting
provisions of the A/R Financing Documents;
(g) Acquiror shall waive any claim or right of subrogation which it
may have to any lien, estate, right or other interest in any portion of the
Property other than a lien on Accounts Receivable that is, or may be,
pursuant to this Section 10.5, prior in right to this Deed of Trust or any
other Loan Document;
(h) To further confirm the requirements of this Section 10.5, the
Accounts Receivable Acquiror shall agree pursuant to a binding written
agreement enforceable by Beneficiary that, within ten (10) days after
request by Beneficiary, it will do, execute, acknowledge and deliver all
and every such further acts, deeds, conveyances,
32
documents, estoppels and instruments as Beneficiary may request for the
better assuring and evidencing the foregoing terms and provisions;
(i) In the event that any payment or distribution of assets is made to
the Accounts Receivable Acquiror in contravention of this Section 10.5, the
Accounts Receivable Acquiror shall agree that such payment or distribution
shall be received and held by it in trust for the benefit of the holder of
the Loan Documents, as the same may be modified, amended and assigned, and
shall, forthwith upon receipt thereof, be paid or distributed to such
holder; and
(j) In connection with a bankruptcy, insolvency or other proceeding
relating to any of the Loan Documents or A/R Financing Documents, the
provisions of this Section 10.5 shall remain in full force and effect, and
the court having jurisdiction over such proceeding is hereby authorized to
preserve any such priority and subordination set forth herein in approving
any plan of reorganization, arrangement or liquidation without the prior
written consent of the Beneficiary or the Accounts Receivable Acquiror.
Grantor may grant to the Accounts Receivable Acquiror a lien, subordinate
to the lien hereof, on any other portion of the Mortgaged Property representing
General Intangibles; provided, however, that (i) such lien shall not be enforced
until the Debt has been paid in full and (ii) and all documents creating,
evidencing or otherwise executed in connection therewith or herewith shall be
acceptable to Beneficiary in its sole discretion.
ARTICLE XI.
FURTHER ASSURANCES
------------------
33
11.1. Defense of Title. If the title to the Mortgaged Property or the
----------------
interest of Beneficiary therein shall be directly or indirectly endangered,
clouded or adversely affected in any manner, Grantor, at Grantor's expense,
shall take all necessary and proper steps for the defense of said title or
interest, including the employment of counsel approved by Beneficiary, the
prosecution or defense of litigation, and the compromise or discharge of claims
made against said title or interest. Notwithstanding the foregoing, in the
event that Beneficiary determines that Grantor is not adequately performing its
obligations under this Section, Beneficiary may, without limiting or waiving any
other rights or remedies of Beneficiary hereunder, take such steps with respect
thereto as Beneficiary shall deem necessary or proper and any and all costs and
expenses incurred by Beneficiary in connection therewith, together with interest
thereon at the Default Interest Rate from the date incurred by Beneficiary until
actually paid by Grantor, shall be immediately paid by Grantor on demand and
shall be secured by this Deed of Trust and by all of the other Loan Documents
securing all or any part of the Debt.
11.2. Performance of Obligations. Grantor shall pay when due the
--------------------------
principal of and the interest on the Debt in accordance with the terms of the
Note and this Deed of Trust. Grantor shall also pay all charges, fees and other
sums required to be paid by Grantor as provided in the Loan Documents, in
accordance with the terms of the Loan Documents, and shall observe, perform and
discharge all obligations, covenants and agreements to be observed, performed or
discharged by Grantor set forth in the Loan Documents in accordance with their
terms. Further, Grantor shall promptly and strictly perform and comply with all
covenants, conditions, obligations and prohibitions required of Grantor in
connection with any other document or instrument affecting title to the
Mortgaged Property, or any part thereof, regardless of whether such document or
instrument is superior or subordinate to this Deed of Trust.
11.3. Construction Liens. Grantor shall pay when due all claims and
------------------
demands of mechanics, materialmen, laborers and others for any work performed or
materials delivered for the Premises or the Improvements; provided, however,
-------- -------
that Grantor shall have the right to contest in good faith any such claim or
demand, so long as it does so diligently, by appropriate proceedings and without
prejudice to Beneficiary and provided that neither the Mortgaged Property nor
any interest therein would be in any danger of sale, loss or forfeiture as a
result of such proceeding or contest. In the event Grantor shall contest any
such claim or demand, Grantor shall promptly notify Beneficiary of such contest
and thereafter shall, upon Beneficiary's request, promptly provide a bond, cash
deposit or other security satisfactory to Beneficiary to protect Beneficiary's
interest and security should the contest be unsuccessful. If Grantor shall fail
to immediately discharge or provide security against any such claim or demand as
aforesaid, Beneficiary may do so and any and all expenses incurred by
Beneficiary, together with interest thereon at the Default Interest Rate from
the date incurred by Beneficiary until actually paid by Grantor, shall be
immediately paid by Grantor on demand and shall be secured by this Deed of Trust
and by all of the other Loan Documents securing all or any part of the Debt.
11.4. Further Documentation. Grantor shall, on the request of Beneficiary
---------------------
and at the expense of Grantor: (a) promptly correct any defect, error or
omission which may be discovered in the contents of this Deed of Trust or in the
contents of any of the other Loan Documents; (b) promptly execute, acknowledge,
deliver and record or file such further instruments (including, without
limitation, further mortgages, deeds of trust, security deeds, security
agreements, financing statements, continuation statements and assignments of
rents or leases) and promptly do such further acts as may be necessary,
desirable or proper to carry out more effectively the purposes of this Deed of
Trust and the other Loan Documents and to
34
subject to the liens and security interests hereof and thereof any property
intended by the terms hereof and thereof to be covered hereby and thereby,
including specifically, but without limitation, any renewals, additions,
substitutions, replacements or appurtenances to the Mortgaged Property; (c)
promptly execute, acknowledge, deliver, procure and record or file any document
or instrument (including specifically, without limitation, any financing
statement) deemed advisable by Beneficiary to protect, continue or perfect the
liens or the security interests hereunder against the rights or interests of
third persons; and (d) promptly furnish to Beneficiary, upon Beneficiary's
request, a duly acknowledged written statement and estoppel certificate
addressed to such party or parties as directed by Beneficiary and in form and
substance supplied by Beneficiary, setting forth all amounts due under the Note,
stating whether any Default or Event of Default has occurred hereunder, stating
whether any offsets or defenses exist against the Debt and containing such other
matters as Beneficiary may reasonably require.
11.5. Payment of Costs; Beneficiary's Right to Cure. Grantor shall pay
---------------------------------------------
all costs and expenses of every character reasonably incurred in connection with
the closing of the loan evidenced by the Note and secured hereby or otherwise
attributable or chargeable to Grantor as the owner of the Mortgaged Property,
including, without limitation, appraisal fees, recording fees, documentary,
stamp, Deed of Trust or intangible taxes, brokerage fees and commissions, title
policy premiums and title search fees, uniform commercial code/tax
lien/litigation search fees, escrow fees and reasonable attorneys' fees and
disbursements. If Grantor defaults in any such payment, which default is not
cured within any applicable grace or cure period, Beneficiary may, at its option
pay the same and Grantor shall reimburse Beneficiary on demand for all such
costs and expenses incurred or paid by Beneficiary, together with such interest
thereon at the Default Interest Rate from and after the date of Beneficiary's
making such payment until reimbursement thereof by Grantor. Any such sums
disbursed by Beneficiary, together with such interest thereon, shall be
additional indebtedness of Grantor secured by this Deed of Trust and by all of
the other Loan Documents securing all or any part of the Debt. Further, Grantor
shall promptly notify Beneficiary in writing of any litigation or threatened
litigation affecting the Mortgaged Property, or any other demand or claim which,
if enforced, could impair or threaten to impair Beneficiary's security
hereunder. Without limiting or waiving any other rights and remedies of
Beneficiary hereunder, if Grantor fails to perform any of its covenants or
agreements contained in this Deed of Trust or in any of the other Loan Documents
and such failure is not cured within any applicable grace or cure period, or if
any action or proceeding of any kind (including, but not limited to, any
bankruptcy, insolvency, arrangement, reorganization or other debtor relief
proceeding) is commenced which might affect Beneficiary's interest in the
Mortgaged Property or Beneficiary's right to enforce its security, then
Beneficiary may, at its option, with or without notice to Grantor, make any
appearances, disburse any sums and take any actions as may be necessary or
desirable to protect or enforce the security of this Deed of Trust or to remedy
the failure of Grantor to perform its covenants and agreements (without,
however, waiving any default of Grantor). Grantor agrees to pay on demand all
expenses of Beneficiary or Trustee incurred with respect to the foregoing
(including, but not limited to, reasonable fees and disbursements of counsel),
together with interest thereon at the Default Interest Rate from and after the
date on which Beneficiary or Trustee incurs such expenses until reimbursement
thereof by Grantor. Any such expenses so incurred by Beneficiary, together with
interest thereon as provided above, shall be additional indebtedness of Grantor
secured by this Deed of Trust and by all of the other Loan Documents securing
all or any part of the Debt. The necessity for any such actions and of the
amounts to be paid shall be determined by Beneficiary in its sole discretion.
Beneficiary is hereby empowered to enter and to authorize others to enter upon
the Mortgaged Property or any part thereof for the purpose of performing or
observing any such defaulted term, covenant or condition without thereby
35
becoming liable to Grantor or any person in possession holding under Grantor.
Grantor hereby acknowledges and agrees that the remedies set forth in this
Section 11.5 shall be exercisable by Beneficiary, and any and all payments made
- ------------
or costs or expenses incurred by Beneficiary in connection therewith shall be
secured hereby and shall be, without demand, immediately repaid by Grantor with
interest thereon at the Default Interest Rate, notwithstanding the fact that
such remedies were exercised and such payments made and costs incurred by
Beneficiary after the filing by Grantor of a voluntary case or the filing
against Grantor of an involuntary case pursuant to or within the meaning of
Title 11, United States Code, as amended, or after any similar action pursuant
to any other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may
be or become applicable to Grantor, Beneficiary, any Indemnitor, the Debt or any
of the Loan Documents.
11.6. Compliance with Laws. Grantor shall at all times comply with all
--------------------
statutes, ordinances, regulations and other governmental or quasi-governmental
requirements and private covenants now or hereafter relating to the ownership,
construction, use or operation of the Mortgaged Property, including, but not
limited to, those concerning employment and compensation of persons engaged in
operation and maintenance of the Mortgaged Property and any environmental or
ecological requirements, even if such compliance shall require structural
changes to the Mortgaged Property; provided, however, that, Grantor may, upon
-------- -------
providing Beneficiary with security satisfactory to Beneficiary, proceed
diligently and in good faith to contest the validity or applicability of any
such statute, ordinance, regulation or requirement so long as during such
contest the Mortgaged Property shall not be subject to any lien, charge, fine or
other liability and shall not be in danger of being forfeited, lost or closed.
Grantor shall not use or occupy, or allow the use or occupancy of, the Mortgaged
Property in any manner which violates any Lease of or any other agreement
applicable to the Mortgaged Property or any applicable law, rule, regulation or
order or which constitutes a public or private nuisance or which makes void,
voidable or cancelable, or increases the premium of, any insurance then in force
with respect thereto.
11.7. Attorney-in-Fact Provisions. With respect to any provision of this
---------------------------
Deed of Trust or any other Loan Document whereby Grantor grants to Beneficiary a
power-of-attorney, (i) such power shall be deemed to be coupled with an
interest, shall not be revocable by Grantor so long as any portion of the Debt
is outstanding, shall survive the voluntary or involuntary dissolution of
Grantor and shall not be affected by any disability or incapacity suffered by
Grantor subsequent to the date hereof and (ii) provided no Default or Event of
Default has occurred under this Deed of Trust, Beneficiary shall first give
Grantor written notice at least three (3) days prior to acting under such power,
which notice shall demand that Grantor first take the proposed action within
such period and advising Grantor that if it fails to do so, Beneficiary will so
act under the power; provided, however, that, in the event that a Default or an
Event of Default has occurred and not been waived, or if necessary to prevent
imminent death, serious injury, damage, loss, forfeiture or diminution in value
to the Mortgaged Property or any surrounding property or to prevent any adverse
affect on Beneficiary's interest in the Mortgaged Property, Beneficiary may act
immediately and without first giving such notice. In such event, Beneficiary
will give Grantor notice of such action as soon thereafter as reasonably
practical.
Article XII.
PAYMENT; DEFEASANCE; PREPAYMENT
12.1. Payment of the Notes. Grantor shall duly and punctually pay or
--------------------
cause to be paid, the principal of and the interest and premium, if any, on the
Note in accordance with the
36
respective terms hereof and thereof, without demand therefor or presentation of
the Note, in lawful money of the United States of America.
12.2. Computation of Interest. Interest shall be computed hereunder and
-----------------------
under the Note based on a 360-day year comprised of twelve 30-day months except
that interest due and payable for a period less than a full month shall be
calculated by multiplying the actual number of days elapsed in such period by a
daily rate based on said 360 day year. Interest shall accrue from the date on
which funds are advanced under the Note (regardless of the time of day) through
and including the day on which funds are credited in accordance with the terms
of the Note. Interest shall be payable hereunder and under the Note.
12.3. Application of Payments. So long as no Event of Default exists
-----------------------
hereunder which has not been waived, each Monthly Payment shall be applied
first, to any amounts hereafter advanced by Beneficiary under any Loan Document,
second, to any late fees and other amounts payable to Beneficiary, third, to the
payment of accrued interest and last to reduction of principal.
12.4. Prepayment.
----------
The Note may not be prepaid in whole or in part at the option of
the Grantor except as provided below;
Partial prepayments of the Note shall not be permitted, except for
partial prepayments resulting from Beneficiary's election to apply insurance or
condemnation proceeds to reduce the outstanding principal balance of the Note as
provided in Section 3.1(b) hereof, in which event no prepayment fee or premium
--------------
shall be due unless, at the time of either Beneficiary's receipt of such
proceeds or the application of such proceeds to the outstanding principal
balance of the Note, an Event of Default shall have occurred and not been
waived, in which case, the provisions of Section 15.2 hereof shall be
------------
controlling.
If the indebtedness evidenced by the Note shall have been declared
due and payable by Beneficiary pursuant to the terms thereof or the terms hereof
or the provisions of any other Loan Document due to a default by Grantor, then
subject to Section 16.22 hereof there shall also then be immediately due and
payable, a prepayment fee in an amount equal to the greater of (A) five percent
(5%) of the then outstanding principal balance of the Note on the date of
acceleration, and (B) an amount which would be sufficient to purchase securities
meeting the requirements of Section 12.5(C)(2) below. In the event that any
------------------
prepayment fee is due hereunder, Beneficiary shall deliver to Grantor a
statement setting forth the amount and determination of the prepayment fee, and
provided that Beneficiary shall have in good faith applied the formula described
above, Grantor shall not have the right to challenge the calculation or the
method of calculation set forth in any such statement in the absence of manifest
error.
12.5. Defeasance. Notwithstanding any provision of this Deed of Trust to the
----------
contrary, at any time after the date which (1) is two years after the "startup
day," within the meaning of Section 860G(a)(9) of the Internal Revenue Code of
1986, as amended from time to time or any successor statute (the "Code"), of a
----
"real estate Deed of Trust investment conduit," ("REMIC") within the meaning of
-----
Section 860D of the Code, that holds the Note and this Deed of Trust or (2)
three years after the date hereof, whichever shall later occur, and provided no
Event of Default has occurred, Grantor may cause the release of either (x) the
entire Mortgaged Property or (y) a Partial Release consisting of one or more
Partial Release Parcels as provided in
37
Section 6.5, from the lien of this Deed of Trust and the other Loan Documents
upon the satisfaction of the following conditions (and, with respect to a
-----------------------
Partial Release, upon the satisfaction of the additional conditions set forth in
- --------------------------------------------------------------------------------
Section 6.5 above):
- ------------------
(a) with respect to a release of the entire Mortgaged Property (a
"Defeasance"), not less than thirty (30) days prior written notice shall be
given to Beneficiary specifying a Payment Date (the "Release Date") on which the
------------
Defeasance Collateral is to be delivered; provided however, that with respect to
----------------
a Partial Release, Grantor shall give Beneficiary a Partial Release Notice in
accordance with Section 6.5;
(b) Grantor shall deliver to Beneficiary on or prior to the Release
Date or Partial Release Date, as applicable:
(1) a pledge and security agreement, in form and substance
satisfactory to Beneficiary in its sole discretion, creating
a first priority security interest in favor of Beneficiary
in the Defeasance Collateral (the "Defeasance Security
-------------------
Agreement"), which shall provide, among other things, that
---------
any payments generated by the Defeasance Collateral shall be
paid directly to Beneficiary and applied by Beneficiary in
satisfaction of all amounts then due and payable hereunder
and any excess received by Beneficiary from the Defeasance
Collateral which, when added to the amounts received under
the Note, exceeds the amounts payable by Grantor hereunder
or under the Note shall be refunded to Grantor promptly
after each Payment Date;
(2) direct, non-callable obligations of the United States of
America (the "Defeasance Collateral") that provide for
payments prior, but as close as possible, to all successive
Payment Dates occurring after the Release Date, with each
such payment being equal to or greater than (x) with respect
to a complete Defeasance of all of the Mortgaged Property,
the amount of the corresponding installment of principal and
interest required to be paid under the Note for the balance
of the term hereof to the Maturity Date, and (y) with
respect to a Partial Release, the amount of the
corresponding installment of the principal and interest
required to be paid with respect to the Partial Release
Parcel(s) so Defeased, (in either case the "Defeasance
----------
Collateral Payments"), for the balance of the term hereof to
-------------------
the Maturity Date (provided that for all purposes of this
Section 12.5(C)(2), all principal, accrued interest and
------------------
other amounts payable under this Deed of Trust, the Note and
the other Loan Documents shall be due and payable in full on
the Maturity Date). The Defeasance Collateral shall be duly
endorsed by the holder thereof as directed by Beneficiary or
accompanied by a written instrument of transfer in form and
substance satisfactory to Beneficiary in its sole discretion
(including, without limitation, such instruments as may be
required by the depository institution holding such
securities or the issuer thereof, as the case may be, to
effectuate book-entry transfers and pledges through the
book-entry facilities of such institution) in order to
perfect upon the delivery of the Defeasance Security
Agreement the first priority
38
security interest in the Defeasance Collateral in favor of
Beneficiary in conformity with all applicable state and
federal laws governing granting of such security interests;
(3) a certificate of Grantor certifying that all of the
requirements set forth in this Section 12.5 have been
------------
satisfied;
(4) an opinion of counsel for Grantor in form and substance and
delivered by counsel satisfactory to Beneficiary in its sole
discretion stating, among other things, that (x) Beneficiary
has a perfected first priority security interest in the
Defeasance Collateral and that the Defeasance Security
Agreement is enforceable against Grantor in accordance with
its terms and (y) that any trust formed as a REMIC pursuant
to a securitization will not fail to maintain its status as
a REMIC as a result of such defeasance;
(5) such other certificates, documents or instruments as
Beneficiary may reasonably require;
(6) upon compliance with the requirements of this Section 12.5,
------------
the Mortgaged Property (or the Partial Release Parcels, in
the event of a Partial Release) shall be released from the
lien of this Deed of Trust and the other Loan Documents, and
the Defeasance Collateral shall constitute collateral which
shall secure the Note (or, in the event of a Partial
Release, the "Defeased Note," as hereinafter defined), and
all other obligations under the Loan Documents. In the
event of a Partial Release, the Note shall be amended,
modified to reduce the unpaid principal balance and modify
the payment schedule to account for the Partial Release
Payment, and Grantor shall execute and deliver to
Beneficiary a new note, as follows: the Note shall be in
the principal amount of the then unpaid principal balance of
the Note, less the amount of the applicable Partial Release
----
Price, and continuing to be secured by the Mortgaged
Property remaining after the Partial Release; and the new
note shall be in the principal amount equal to the
applicable Partial Release Price and to be secured by the
Defeasance Collateral [such new note, secured by the
Defeasance Collateral, being sometimes referred to as the
"Defeased Note"]). Beneficiary will, at Grantor's expense,
--------------
execute and deliver any agreements reasonably requested by
Grantor to release the lien of the Deed of Trust and any
other appropriate Loan Documents from the applicable
Mortgaged Property; and
(7) upon the release of the applicable Mortgaged Property in
accordance with this Section 12.5, Grantor may assign all
------------
its obligations and rights under the Note, or, in the event
of a partial Defeasance, under the Defeased Note, together
with the pledged Defeasance Collateral, to a successor
entity designated by Grantor and approved by Beneficiary in
its sole discretion. Such successor entity shall execute an
assumption agreement in form and substance satisfactory to
Beneficiary in its sole discretion pursuant to which it
shall assume Grantor's obligations under the Note or, in the
event of a partial Defeasance, the Defeased Note and the
Defeasance Security Agreement. As conditions to such
assignment and assumption, Grantor shall (x) deliver to
Beneficiary an opinion of counsel in form
39
and substance and delivered by counsel satisfactory to
Beneficiary in its sole discretion stating, among other
things, that such assumption agreement and, in the event of
a partial Defeasance, the Defeased Note, are enforceable
against Grantor in accordance with their respective terms
and that such assumption agreement, under the Note or, in
the event of a partial Defeasance, under the Defeased Note,
the Defeasance Security Agreement and the other Loan
Documents, as so assumed, are enforceable against such
successor entity in accordance with their respective terms,
and (y) pay all costs and expenses incurred by Beneficiary
or its agents in connection with such assignment and
assumption (including, without limitation, the review of the
proposed transferee and the preparation of the assumption
agreement and related documentation). Upon such assumption,
Grantor shall be relieved of its obligations (a) in the
event of total Defeasance, under the Note, the other Loan
Documents and the Defeasance Security Agreement and (b) in
the event of a partial Defeasance, under the Defeased Note
and the Defeasance Security Agreement.
Upon compliance with the requirements of this Section 12.5, the Mortgaged
------------
Property shall be released from the lien of this Deed of Trust and the other
Loan Documents, and the balance of the Mortgaged Property, if any, shall
constitute collateral which shall secure the Note and all other obligations
under the Loan Documents. Beneficiary will, at Grantor's expense, execute and
deliver any agreements reasonably requested by Grantor to release the lien this
Deed of Trust from the Mortgaged Property, or the Release Parcels as applicable.
ARTICLE XIII.
SECURITY PROVISIONS
-------------------
13.1. Security Interest. This Deed of Trust is also intended to encumber
-----------------
and create a security interest in, and Grantor hereby grants to Beneficiary a
security interest in, all sums on deposit with Beneficiary pursuant to the
provisions of Section 1.2, Section 5.1 and Section 5.2 hereof or any other
----------- ----------- -----------
Section hereof or of any other Loan Document and all fixtures, chattels,
accounts, equipment, inventory, contract rights, general intangibles and other
personal property included within the Mortgaged Property, all renewals,
replacements of any of the aforementioned items, or articles in substitution
therefor or in addition thereto or the proceeds thereof (said property is
hereinafter referred to collectively as the "Collateral"), whether or not the
----------
same shall be attached to the Premises or the Improvements in any manner. It is
hereby agreed that to the extent permitted by law, all of the foregoing property
is to be deemed and held to be a part of and affixed to the Premises and the
Improvements. The foregoing security interest shall also cover Grantor's
leasehold interest in any of the foregoing property which is leased by Grantor.
Notwithstanding the foregoing, all of the foregoing property shall be owned by
Grantor and no leasing or installment sales or other financing or title
retention agreement in connection therewith shall be permitted without the prior
written approval of Beneficiary.
40
Grantor shall, from time to time upon the request of Beneficiary, supply
Beneficiary with a current inventory of all of the property in which Beneficiary
is granted a security interest hereunder, in such detail as Beneficiary may
reasonably require. Grantor shall promptly replace all of the Collateral subject
to the lien or security interest of this Deed of Trust when worn or obsolete
with Collateral comparable to the worn out or obsolete Collateral when new and
will not, without the prior written consent of Beneficiary, remove from the
Premises or the Improvements any of the Collateral subject to the lien or
security interest of this Deed of Trust except such as is replaced by an article
of equal suitability and value as above provided, owned by Grantor free and
clear of any lien or security interest except that created by this Deed of Trust
and the other Loan Documents. All of the Collateral shall be kept at the
location of the Premises except as otherwise required by the terms of the Loan
Documents. Grantor shall not use any of the Collateral in violation of any
applicable statute, ordinance or insurance policy.
13.2. Security Agreement. This Deed of Trust constitutes a security
------------------
agreement between Grantor and Beneficiary with respect to the Collateral in
which Beneficiary is granted a security interest hereunder, and, cumulative of
all other rights and remedies of Beneficiary hereunder, Beneficiary shall have
all of the rights and remedies of a secured party under any applicable Uniform
Commercial Code. Grantor hereby agrees to execute and deliver on demand and
hereby irrevocably constitutes and appoints Beneficiary the attorney-in-fact of
Grantor to execute and deliver and, if appropriate, to file with the appropriate
filing officer or office, such security agreements, financing statements,
continuation statements or other instruments as Beneficiary may request or
require in order to impose, perfect or continue the perfection of the lien or
security interest created hereby. To the extent specifically provided herein,
Beneficiary shall have the right of possession of all cash, securities,
instruments, negotiable instruments, documents, certificates and any other
evidences of cash or other property or evidences of rights to cash rather than
property, which are now or hereafter a part of the Mortgaged Property, and
Grantor shall promptly deliver the same to Beneficiary, endorsed to Beneficiary,
without further notice from Beneficiary. Grantor agrees to furnish Beneficiary
in writing with notice of any change in the name, identity, organizational
structure, residence, or principal place of business or mailing address of
Grantor thirty (30) days prior to the effective date of any such change.
Expenses of retaking, holding, preparing for sale, selling or the like
(including, without limitation, Beneficiary's reasonable attorneys' fees and
legal expenses), together with interest thereon at the Default Interest Rate
from the date incurred by Beneficiary until actually paid by Grantor, shall be
paid by Grantor on demand and shall be secured by this Deed of Trust and by all
of the other Loan Documents securing all or any part of the Debt. Beneficiary
shall have the right to enter upon the Premises and the Improvements or any real
property where any of the property which is the subject of the security interest
granted herein is located to take possession of, assemble and collect the same
or to render it unusable, or Grantor, upon demand of Beneficiary, shall assemble
such property and make it available to Beneficiary at the Premises, or at a
place which is mutually agreed upon or, if no such place is agreed upon, at a
place reasonably designated by Beneficiary to be reasonably convenient to
Beneficiary and Grantor. If notice is required by law, Beneficiary shall give
Grantor at least ten (10) days' prior written notice of the time and place of
any public sale of such property, or adjournments thereof, or of the time of or
after which any private sale or any other intended disposition thereof is to be
made, and if such notice is sent to Grantor, as the same is provided for the
mailing of notices herein, it is hereby deemed that such notice shall be and is
reasonable notice to Grantor. No such notice is necessary for any such property
which is perishable, threatens to decline speedily in value or is of a type
customarily sold on a recognized market. Any sale made pursuant to the
provisions of this Section shall be deemed to have been a public sale conducted
in a commercially reasonable manner if held contemporaneously with a
41
foreclosure sale as provided in Section 15.1(e) hereof upon giving the same
---------------
notice with respect to the sale of the Mortgaged Property hereunder as is
required under said Section 15.1(e).
---------------
The name and principal place of business of Grantor (as Debtor under
any applicable Uniform Commercial Code) are:
DMG TEXAS ALC PARTNERS, L.P.
9955 S.E. Washington, Suite 201
Portland, Oregon 97216
The name and principal place of business of Beneficiary (as Secured
Party) are:
TRANSATLANTIC CAPITAL COMPANY, L.L.C.
31 West 52nd Street
12th Floor
New York, New York 10019
13.3. Secured Indebtedness. It is understood and agreed that this Deed of
--------------------
Trust shall secure payment of not only the indebtedness evidenced by the Note
but also any and all substitutions, replacements, renewals and extensions of the
Note, any and all indebtedness and obligations arising pursuant to the terms
hereof and any and all indebtedness and obligations arising pursuant to the
terms of any of the other Loan Documents, all of which indebtedness is equally
secured with and has the same priority as any amounts advanced as of the date
hereof. It is agreed that any future advances made by Beneficiary to or for the
benefit of Grantor from time to time under this Deed of Trust or the other Loan
Documents and whether or not such advances are obligatory or are made at the
option of Beneficiary, or otherwise, made for any purpose, within twenty (20)
years from the date hereof, and all interest accruing thereon, shall be equally
secured by this Deed of Trust and shall have the same priority as all amounts,
if any, advanced as of the date hereof and shall be subject to all of the terms
and provisions of this Deed of Trust.
ARTICLE XIV.
DEFAULT
-------
14.1. Events of Default. The occurrence of any of the following events
-----------------
shall be an "Event of Default" hereunder:
(a) Grantor fails to timely make payments of principal or interest as
stipulated in the Note and any such payment is not made within ten (10) days of
the date such payment is due (provided that no grace period is provided for the
payment of principal and interest due on the Maturity Date).
(b) Grantor fails to provide insurance as required by Section 2.1
-----------
hereof or fails to perform any covenant, agreement, obligation, term or
condition set forth in Section 4.1, Section 6.3 or Section 10.4 hereof.
----------- ----------- ------------
(c) Grantor fails to perform any other covenant, agreement,
obligation, term or condition set forth herein, other than those otherwise
described in this Section 14.1, and, to the extent such failure or default is
------------
susceptible of being cured, the continuance of such failure or default for
thirty (30) days after written notice thereof from Beneficiary to Grantor;
provided, however, that if such default is susceptible of cure but such cure
- -------- -------
cannot be accomplished with
42
reasonable diligence within said period of time, and if Grantor commences to
cure such default promptly after receipt of notice thereof from Beneficiary, and
thereafter prosecutes the curing of such default with reasonable diligence, such
period of time shall be extended for such period of time as may be necessary to
cure such default with reasonable diligence, but not to exceed an additional
sixty (60) days.
(d) Any representation or warranty made herein, in or in connection
with any application or commitment relating to the loan evidenced by the Note,
or in any of the other Loan Documents to Beneficiary by Grantor, by any
principal, general partner, manager or member in Grantor, or by any Indemnitor
is determined by Beneficiary to have been false or misleading in any material
respect at the time made.
(e) A default occurs under any of the other Loan Documents which has
not been cured within any applicable grace or cure period therein provided.
(f) Grantor, any principal, general partner or managing member in
Grantor or any Indemnitor becomes insolvent, or makes a transfer in fraud of
creditors, or makes an assignment for the benefit of creditors, or files a
petition in bankruptcy, or is voluntarily adjudicated insolvent or bankrupt or
admits in writing the inability to pay its debts as they mature, or petitions or
applies to any tribunal for or consents to or fails to contest the appointment
of a receiver, trustee, custodian or similar officer for Grantor, for any such
principal, general partner or managing member of Grantor or for any Indemnitor
or for a substantial part of the assets of Grantor, of any such principal,
general partner or managing member of Grantor or of any Indemnitor, or commences
any case, proceeding or other action under any bankruptcy, insolvency,
reorganization, arrangement, receivership or other debtor relief under any law
or statute of any jurisdiction, whether now or hereafter in effect.
(g) A petition is filed or any case, proceeding or other action is
commenced against Grantor, against any principal, general partner or managing
member of Grantor or against any Indemnitor seeking to have an order for relief
entered against it as debtor or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or other relief under
any law relating to bankruptcy, insolvency, arrangement, reorganization,
receivership or other debtor relief under any law or statute of any
jurisdiction, whether now or hereafter in effect, or a court of competent
jurisdiction enters an order for relief against Grantor, against any principal,
general partner or managing member of Grantor or against any Indemnitor, as
debtor, or an order, judgment or decree is entered appointing, with or without
the consent of Grantor, of any such principal, general partner or managing
member of Grantor or of any Indemnitor, a receiver, trustee, custodian or
similar officer for Grantor, for any such principal, general partner or managing
member of Grantor or for any Indemnitor, or for any substantial part of any of
the properties of Grantor, of any such principal, general partner or managing
member of Grantor or of any Indemnitor, and if any such event shall occur, such
petition, case, proceeding, action, order, judgment or decree is not dismissed
within sixty (60) days after being commenced.
(h) The Mortgaged Property or any part thereof is taken on execution
or other process of law in any action against Grantor.
(i) Grantor abandons all or a portion of the Mortgaged Property.
(j) The holder of any lien or security interest on the Mortgaged
Property (without implying the consent of Beneficiary to the existence or
creation of any such lien or
43
security interest other than in connection with A/R Financing permitted pursuant
to the terms of Section 10.5 hereof), whether superior or subordinate to this
Deed of Trust or any of the other Loan Documents, declares a default and such
default is not cured within any applicable grace or cure period set forth in the
applicable document or such holder institutes foreclosure or other proceedings
for the enforcement of its remedies thereunder.
(k) The Mortgaged Property, or any part thereof, is subjected to waste
or to removal, demolition or material alteration so that the value of the
Mortgaged Property is materially diminished thereby and Beneficiary determines
that it is not adequately protected from any loss, damage or risk associated
therewith.
(l) Any dissolution, termination, partial or complete liquidation,
merger or consolidation of Grantor, any of its principals, any general partner
or any managing member.
(m) The business conducted by Grantor or operation of the Mortgaged
Property is in imminent danger of being suspended as a result of any violation
of any state, local or federal rule, law or regulation.
ARTICLE XV.
REMEDIES
--------
15.1. Remedies Available. If there shall occur an Event of Default under
------------------
this Deed of Trust, then this Deed of Trust is subject to foreclosure as
provided by law and Beneficiary may, at its option and by or through a trustee,
nominee, assignee or otherwise (including, without limitation, the Trustee), to
the fullest extent permitted by law, exercise any or all of the following
rights, remedies and recourses, either successively or concurrently:
(a) Acceleration. Accelerate the maturity date of the Note and
------------
declare any or all of the Debt to be immediately due and payable without any
presentment, demand, protest, notice or action of any kind whatever (each of
which is hereby expressly waived by Grantor), whereupon the same shall become
immediately due and payable. Upon any such acceleration, payment of such
accelerated amount shall constitute a prepayment of the principal balance of the
Note and any applicable prepayment fee provided for in the Note shall then be
immediately due and payable.
(b) Entry on the Mortgaged Property. Either in person or by agent,
-------------------------------
with or without bringing any action or proceeding, or by a receiver appointed by
a court and without regard to the adequacy of its security, enter upon and take
possession of the Mortgaged Property, or any part thereof, without force or with
such force as is permitted by law and without notice or process or with such
notice or process as is required by law, unless such notice and process is
waivable, in which case Grantor hereby waives such notice and process, and do
any and all acts and perform any and all work which may be desirable or
necessary in Beneficiary's judgment to complete any unfinished construction on
the Premises, to preserve the value, marketability or rentability of the
Mortgaged Property, to increase the income therefrom, to manage and operate the
Mortgaged Property or to protect the security hereof, and all sums expended by
Beneficiary therefor, together with interest thereon at the Default Interest
Rate, shall be immediately due and payable to Beneficiary by Grantor on demand
and shall be secured hereby and by all of the other Loan Documents securing all
or any part of the Debt.
44
(c) Collect Rents and Profits. With or without taking possession of
-------------------------
the Mortgaged Property, sue or otherwise collect the Rents and Profits,
including those past due and unpaid.
(d) Appointment of Receiver. Upon, or at any time prior or after,
-----------------------
initiating the exercise of any power of sale, instituting any judicial
foreclosure or instituting any other foreclosure of the liens and security
interests provided for herein or any other legal proceedings hereunder, make
application to a court of competent jurisdiction for appointment of a receiver
for all or any part of the Mortgaged Property, as a matter of strict right and
without notice to Grantor and without regard to the adequacy of the Mortgaged
Property for the repayment of the Debt or the solvency of Grantor or any person
or persons liable for the payment of the Debt, and Grantor does hereby
irrevocably consent to such appointment, waive any and all notices of and
defenses to such appointment and agree not to oppose any application therefor by
Beneficiary, but nothing herein is to be construed to deprive Beneficiary of any
other right, remedy or privilege Beneficiary may now have under the law to have
a receiver appointed, provided, however, that the appointment of such receiver,
-------- -------
trustee or other appointee by virtue of any court order, statute or regulation
shall not impair or in any manner prejudice the rights of Beneficiary to receive
payment of the Rents and Profits pursuant to other terms and provisions hereof.
Any such receiver shall have all of the usual powers and duties of receivers in
similar cases, including, without limitation, the full power to hold, develop,
rent, lease, manage, maintain, operate and otherwise use or permit the use of
the Mortgaged Property upon such terms and conditions as said receiver may deem
to be prudent and reasonable under the circumstances as more fully set forth in
Section 15.3 below. Such receivership shall, at the option of Beneficiary,
- ------------
continue until full payment of all of the Debt or until title to the Mortgaged
Property shall have passed by foreclosure sale under this Deed of Trust or deed
in lieu of foreclosure.
(e) Foreclosure. Immediately commence an action to foreclose this
-----------
Deed of Trust or to specifically enforce its provisions with respect to any of
the Debt, pursuant to the statutes in such case made and provided, and sell the
Mortgaged Property or cause the Mortgaged Property to be sold in accordance with
the requirements and procedures provided by said statutes in a single parcel or
in several parcels at the option of Beneficiary. In the event foreclosure
proceedings are instituted by Beneficiary, all expenses incident to such
proceedings, including, but not limited to, reasonable attorneys' fees and
costs, shall be paid by Grantor and secured by this Deed of Trust and by all of
the other Loan Documents securing all or any part of the Debt. The Debt and all
other obligations secured by this Deed of Trust, including, without limitation,
interest at the Default Interest Rate any prepayment charge, fee or premium
required to be paid under the Note in order to prepay principal (to the extent
permitted by applicable law), reasonable attorneys' fees and any other amounts
due and unpaid to Beneficiary under the Loan Documents, may be bid by
Beneficiary in the event of a foreclosure sale hereunder. In the event of a
judicial sale pursuant to a foreclosure decree, it is understood and agreed that
Beneficiary or its assigns may become the purchaser of the Mortgaged Property or
any part thereof.
(f) Judicial Remedies. Proceed by suit or suits, at law or in equity,
-----------------
instituted by or on behalf of Beneficiary, upon written request of Beneficiary,
to enforce the payment of the Debt or the other obligations of Grantor hereunder
or pursuant to the Loan Documents, to foreclose the liens and security interests
of this Deed of Trust as against all or any part of the Mortgaged Property, and
to have all or any part of the Mortgaged Property sold under the judgment or
decree of a court of competent jurisdiction. This remedy shall be cumulative of
any other non-judicial remedies available to Beneficiary with respect to the
Loan Documents.
45
Proceeding with the request or receiving a judgement for legal relief shall not
be or be deemed to be an election of remedies or bar any available non-judicial
remedy of Beneficiary.
(g) Sale of Property. (i) Trustee, at the request of Beneficiary,
----------------
shall have the power to sell the Mortgaged Property or any part thereof at
public auction, in such manner, at such time, and place, upon such terms and
conditions, and upon five (5) days notice to Grantor and such public notice as
Beneficiary may deem best for the interest of Beneficiary or as may be required
or permitted by applicable law, consisting of advertisement in a newspaper of
general circulation in the jurisdiction and for such period as applicable law
may require and at such other times and by such other methods, if any, as may be
required by law to convey the Mortgaged Property in fee simple by trustee's deed
with special warranty of title to and at the cost of the purchaser, who shall
not be liable to see to the application of the purchase money. The proceeds or
avails of any sale made under or by virtue of this paragraph, together with any
other sums which then may be held by Beneficiary under this Deed of Trust,
whether under the provisions of this paragraph or otherwise, shall be applied as
provided in Section 15.2 hereof. Beneficiary, Trustee and any receiver or
custodian of the Mortgaged Property or any part thereof shall be liable to
account for only those rents, issues, proceeds and profits actually received by
it.
(ii) Beneficiary and Trustee, as applicable, may adjourn from time to
time any sale by it to be made under or by virtue of this Deed of Trust by
announcement at the time and place appointed for such sale or for such adjourned
sale or sales and, except as otherwise provided by any applicable law,
Beneficiary or Trustee, without further notice or publication, may make such
sale at the time and place to which the same shall be so adjourned.
(iii) Upon the completion of any sale or sales ordered by Beneficiary
and made by Trustee under or by virtue of this paragraph, Beneficiary or
Trustee, or any officer of any court empowered to do so, shall execute and
deliver to the accepted purchaser or purchasers a good and sufficient
instrument, or good and sufficient instruments, granting, conveying, assigning
and transferring all estate, right, title and interest in and to the property
and rights sold. Trustee is hereby irrevocably appointed the true and lawful
attorney-in-fact for Grantor (coupled with an interest), in its name and stead,
to make all necessary conveyances, assignments, transfers and deliveries of the
property and rights so sold and for that purpose Trustee may execute all
necessary instruments of conveyance, assignment, transfer and delivery, and may
substitute one or more persons with like power, Grantor hereby ratifying and
confirming all that its said attorney-in-fact or such substitute or substitutes
shall lawfully do by virtue hereof. Nevertheless, Grantor, if so requested by
Trustee or Beneficiary, shall ratify and confirm any such sale or sales by
executing and delivering to Beneficiary, or to such purchaser or purchasers all
such instruments as may be advisable, in the sole judgment of Beneficiary, for
such purpose, and as may be designated in such request. Any such sale or sales
made under or by virtue or this paragraph, whether made under the power of sale
herein granted or under or by virtue of judicial proceedings or a judgment or
decree of foreclosure and sale, shall operate to divest all the estate, right,
title, interest, claim and demand whatsoever, whether at law or in equity, of
Grantor in and to the property and rights so sold, and shall, to the fullest
extent permitted under law, be a perpetual bar both at law and in equity against
Grantor and against any and all persons claiming or who may claim the same, or
any party thereof, from, through or under Grantor.
(iv) In the event of any sale made under or by virtue of this Deed of
Trust (whether made under the power of sale herein granted or under or by virtue
of judicial proceedings or a judgment or decree of foreclosure and sale), the
entire Debt relative to the
46
Mortgaged Property, immediately thereupon shall, anything in the Note, this Deed
of Trust or any other of the Loan Documents to the contrary notwithstanding,
become due and payable.
(v) Upon any sale under or by virtue of this Deed of Trust (whether
made under the power of sale herein granted or under or by virtue of judicial
proceedings or a judgment or decree of foreclosure and sale), Beneficiary may
bid for and acquire the Mortgaged Property or any part thereof and in lieu of
paying cash therefor may make settlement for the purchase price by crediting the
Debt to and against the net sales price after deducting therefrom the expenses
of the sale and the costs of the action.
(vi) No recovery of any judgment by Beneficiary and no levy of an
execution under any judgment upon the Mortgaged Property or any part thereof or
upon any other property of Grantor shall release the lien of this Deed of Trust
upon the Mortgaged Property or any part thereof, or any liens, rights, powers or
remedies of Beneficiary hereunder, but such liens, rights, powers and remedies
of Beneficiary shall continue unimpaired until the entire Debt is paid in full.
(h) Other. Exercise any other right or remedy available hereunder,
-----
under any of the other Loan Documents or at law or in equity.
15.2. Application of Proceeds. To the fullest extent permitted by law,
-----------------------
the proceeds of any sale under this Deed of Trust shall be applied, to the
extent funds are so available, to the following items in such order as
Beneficiary in its discretion may determine:
(a) To payment of the reasonable costs, expenses and fees of taking
possession of the Mortgaged Property, and of holding, operating, maintaining,
using, leasing, repairing, improving, marketing and selling the same and of
otherwise enforcing Beneficiary's rights and remedies hereunder and under the
other Loan Documents, including, but not limited to, receivers' fees, court
costs, attorneys', accountants', appraisers', managers' and other professional
fees, title charges and transfer taxes.
(b) To payment of all sums expended by Beneficiary under the terms of
any of the Loan Documents and not yet repaid, together with interest on such
sums at the Default Interest Rate.
(c) To payment of the Debt and all other obligations secured by this
Deed of Trust, including, without limitation, interest at the Default Interest
Rate and, to the extent permitted by applicable law, any prepayment fee, charge
or premium required to be paid under the Note in order to prepay principal, in
any order that Beneficiary chooses in its sole discretion.
(d) The remainder, if any, of such funds shall be disbursed to Grantor
or to the person or persons legally entitled thereto.
15.3. Right and Authority of Receiver or Beneficiary in the Event of
--------------------------------------------------------------
Default; Power of Attorney. Upon the occurrence of an Event of Default, and
- --------------------------
entry upon the Mortgaged Property pursuant to Section 15.1(b) hereof or
---------------
appointment of a receiver pursuant to Section 15.1(d) hereof, and under such
---------------
terms and conditions as may be prudent and reasonable under the circumstances in
Beneficiary's or the receiver's sole discretion, all at Grantor's expense,
Beneficiary or said receiver, or such other persons or entities as they shall
hire, direct or engage, as the case may be, may do or permit one or more of the
following, successively or concurrently: (a) enter upon and take possession and
control of any and all of the Mortgaged
47
Property; (b) take and maintain possession of all documents, books, records,
papers and accounts relating to the Mortgaged Property; (c) exclude Grantor and
its agents, servants and employees wholly from the Mortgaged Property; (d)
manage and operate the Mortgaged Property; (e) preserve and maintain the
Mortgaged Property; (f) make repairs and alterations to the Mortgaged Property;
(g) complete any construction or repair of the Improvements, with such changes,
additions or modifications of the plans and specifications or intended
disposition and use of the Improvements as Beneficiary may in its sole
discretion deem appropriate or desirable to place the Mortgaged Property in such
condition as will, in Beneficiary's sole discretion, make it or any part thereof
readily marketable or rentable; (h) conduct a marketing or leasing program with
respect to the Mortgaged Property, or employ a marketing or leasing agent or
agents to do so, directed to the leasing or sale of the Mortgaged Property under
such terms and conditions as Beneficiary may in its sole discretion deem
appropriate or desirable; (i) employ such contractors, subcontractors,
materialmen, architects, engineers, consultants, managers, brokers, marketing
agents, or other employees, agents, independent contractors or professionals, as
Beneficiary may in its sole discretion deem appropriate or desirable to
implement and effectuate the rights and powers granted herein and in the other
Loan Documents; (j) execute and deliver, in the name of Beneficiary as attorney-
in-fact and agent of Grantor or in its own name as Beneficiary, such documents
and instruments as are necessary or appropriate to consummate authorized
transactions; (k) enter into such leases, whether of real or personal property,
or tenancy agreements, under such terms and conditions as Beneficiary may in its
sole discretion deem appropriate or desirable; (l) collect and receive the Rents
and Profits from the Mortgaged Property; (m) eject tenants or repossess personal
property, as provided by law, for breaches of the conditions of their leases or
other agreements; (n) sue for unpaid Rents and Profits, payments, income or
proceeds in the name of Grantor or Beneficiary; (o) maintain actions in forcible
entry and detainer, ejectment for possession and actions in distress for rent;
(p) compromise or give acquittance for Rents and Profits, payments, income or
proceeds that may become due; (q) delegate or assign any and all rights and
powers given to Beneficiary by this Deed of Trust; and (r) do any acts which
Beneficiary or the receiver in its sole discretion deems appropriate or
desirable to protect the security hereof and use such measures, legal or
equitable, as Beneficiary or the receiver may in its sole discretion deem
appropriate or desirable to implement and effectuate the provisions of this Deed
of Trust. This Deed of Trust shall constitute a direction to and full authority
to any Tenant, or other third party who has heretofore dealt or contracted or
may hereafter deal or contract with Grantor or Beneficiary, at the request of
Beneficiary, to pay all amounts owing under any lease, contract, concession,
license or other agreement to Beneficiary without proof of the Event of Default
relied upon. Any such Tenant or third party is hereby irrevocably authorized to
rely upon and comply with (and shall be fully protected by Grantor in so doing)
any request, notice or demand by Beneficiary for the payment to Beneficiary of
any Rents and Profits or other sums which may be or thereafter become due under
its lease, contract, concession, license or other agreement, or for the
performance of any undertakings under any such lease, contract, concession,
license or other agreement, and shall have no right or duty to inquire whether
any Event of Default under this Deed of Trust or under any of the other Loan
Documents has actually occurred or is then existing. Grantor hereby irrevocably
constitutes and appoints Beneficiary, its assignees, successors, transferees and
nominees, as Grantor's true and lawful attorney-in-fact and agent, with full
power of substitution in the Mortgaged Property, in Grantor's name, place and
stead, to do or permit any one or more of the foregoing described rights,
remedies, powers and authorities, successively or concurrently. Any money
advanced by Beneficiary in connection with any action taken under this Section
-------
15.3, together with interest thereon at the Default Interest Rate from the date
- ----
of making such advancement by Beneficiary until actually paid by
48
Grantor, shall be a demand obligation owing by Grantor to Beneficiary and shall
be secured by this Deed of Trust and by every other instrument securing all or
any portion of the Debt.
15.4. Occupancy After Foreclosure. In the event there is a foreclosure
---------------------------
sale hereunder and at the time of such sale, Grantor or Grantor's
representatives, successors or assigns, or any other persons claiming any
interest in the Mortgaged Property by, through or under Grantor (except Tenants
under Leases entered into prior to the date hereof), are occupying or using the
Mortgaged Property, or any part thereof, then, to the extent not prohibited by
applicable law, each and all shall, at the option of Beneficiary or the
purchaser at such sale, as the case may be, immediately become the tenant of the
purchaser at such sale, which tenancy shall be a tenancy from day-to-day,
terminable at the will of either landlord or tenant, at a reasonable rental per
day based upon the higher of either (i) any rate provided in a lease then in
effect with Grantor or, if none exists, then (ii) the value of the Mortgaged
Property occupied or used, such rental to be due daily to the purchaser.
Further, to the extent permitted by applicable law, in the event the tenant
fails to surrender possession of the Mortgaged Property upon the termination of
such tenancy, the purchaser shall be entitled to institute and maintain an
action for unlawful detainer of the Mortgaged Property in the appropriate court
of the county in which the Premises is located.
15.5. Notice to Account Debtors. Beneficiary may, at any time after an
-------------------------
Event of Default, notify the account debtors and obligors of any accounts,
chattel paper, negotiable instruments or other evidences of indebtedness to
Grantor included in the Mortgaged Property to pay Beneficiary directly. Grantor
shall at any time or from time to time upon the request of Beneficiary provide
to Beneficiary a current list of all such account debtors and obligors and their
addresses.
15.6. Cumulative Remedies. All remedies contained in this Deed of Trust
-------------------
are cumulative and Beneficiary shall also have all other remedies provided at
law and in equity or in any other Loan Documents. Such remedies may be pursued
separately, successively or concurrently at the sole subjective direction of
Beneficiary and may be exercised in any order and as often as occasion therefor
shall arise.
15.7. Payment of Expenses. Grantor shall pay on demand all of
-------------------
Beneficiary's expenses incurred in any efforts to enforce any terms of this Deed
of Trust, whether or not any lawsuit is filed and whether or not foreclosure is
commenced but not completed, including, but not limited to, reasonable legal
fees and disbursements, foreclosure costs and title charges, together with
interest thereon from and after the date incurred by Beneficiary until actually
paid by Grantor at the Default Interest Rate, and the same shall be secured by
this Deed of Trust and by all of the other Loan Documents securing all or any
part of the Debt.
15.8. Grantor's Waivers. To the full extent permitted by law, Grantor
-----------------
agrees that Grantor shall not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, moratorium or extension, or any law now or
hereafter in force providing for the reinstatement of the Debt prior to any sale
of the Mortgaged Property to be made pursuant to any provisions contained herein
or prior to the entering of any decree, judgment or order of any court of
competent jurisdiction, or any right under any statute to redeem all or any part
of the Mortgaged Property so sold. Grantor, for Grantor and Grantor's
successors and assigns, and for any and all persons ever claiming any interest
in the Mortgaged Property, to the full extent permitted by law, hereby
knowingly, intentionally and voluntarily, with and upon the advice of competent
counsel: (a) waives, releases, relinquishes and forever forgoes all rights of
valuation, appraisement, stay of
49
execution, reinstatement and notice of election or intention to mature or
declare due the Debt (except such notices as are specifically provided for
herein); (b) waives, releases, relinquishes and forever forgoes all right to a
marshaling of the assets of Grantor, including the Mortgaged Property, to a sale
in the inverse order of alienation, or to direct the order in which any of the
Mortgaged Property shall be sold in the event of foreclosure of the liens and
security interests hereby created and agrees that any court having jurisdiction
to foreclose such liens and security interests may order the Mortgaged Property
sold as an entirety; and (c) waives, releases, relinquishes and forever forgoes
all rights and periods of redemption provided under applicable law. To the full
extent permitted by law, Grantor shall not have or assert any right under any
statute or rule of law pertaining to the exemption of homestead or other
exemption under any federal, state or local law now or hereafter in effect, the
administration of estates of decedents or other matters whatever to defeat,
reduce or affect the right of Beneficiary under the terms of this Deed of Trust
to a sale of the Mortgaged Property, for the collection of the Debt without any
prior or different resort for collection, or the right of Beneficiary under the
terms of this Deed of Trust to the payment of the Debt out of the proceeds of
sale of the Mortgaged Property in preference to every other claimant whatever.
Furthermore, Grantor hereby knowingly, intentionally and voluntarily, with and
upon the advice of competent counsel, waives, releases, relinquishes and forever
forgoes all present and future statutes of limitations as a defense to any
action to enforce the provisions of this Deed of Trust or to collect any of the
Debt to the fullest extent permitted by law. Grantor covenants and agrees that
upon the commencement of a voluntary or involuntary bankruptcy proceeding by or
against Grantor, Grantor shall not seek a supplemental stay or otherwise shall
not seek pursuant to 11 U.S.C. (S)105 or any other provision of Title 11, United
States Code, as amended, or any other debtor relief law (whether statutory,
common law, case law, or otherwise) of any jurisdiction whatsoever, now or
hereafter in effect, which may be or become applicable, to stay, interdict,
condition, reduce or inhibit the ability of Beneficiary to enforce any rights of
Beneficiary against any guarantor or indemnitor of the secured obligations or
any other party liable with respect thereto by virtue of any indemnity, guaranty
or otherwise.
15.9. Submission to Jurisdiction; Waiver of Jury Trial.
------------------------------------------------
(a) GRANTOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
(i) SUBMITS TO PERSONAL JURISDICTION IN THE STATE IN WHICH THE PREMISES IS
LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR
RELATING TO THE NOTE, THIS DEED OF TRUST OR ANY OTHER OF THE LOAN DOCUMENTS,
(ii) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN THE COUNTY IN WHICH THE
PREMISES IS LOCATED, (iii) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (iv)
TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT
THE RIGHT OF BENEFICIARY TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER
FORUM).
(b) EACH OF GRANTOR AND BENEFICIARY BY ITS ACCEPTANCE OF THIS DEED OF
TRUST, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES
AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BASED UPON, ARISING OUT
50
OF, OR IN ANY WAY RELATING TO THE DEBT OR ANY CONDUCT, ACT OR OMISSION OF
BENEFICIARY OR GRANTOR, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS
AFFILIATED WITH BENEFICIARY OR GRANTOR, IN EACH OR THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE. GRANTOR HEREBY CONSENTS AND AGREES TO
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS, IN CONNECTION WITH ANY
SUIT, ACTION OR PROCEEDING ARISING FROM OR RELATING TO THE NOTE, THIS DEED OF
TRUST OR ANY OF THE OTHER LOAN DOCUMENTS BY REGISTERED OR CERTIFIED U.S. MAIL,
POSTAGE PREPAID TO GRANTOR AT THE ADDRESS FOR NOTICES DESCRIBED HEREINABOVE.
ARTICLE XVI.
MISCELLANEOUS TERMS AND CONDITIONS
----------------------------------
16.1. Time of Essence. Time is of the essence with respect to all
---------------
provisions of this Deed of Trust.
16.2. Release of Deed of Trust. If all of the Debt be paid, then and in
------------------------
that event only, all rights under this Deed of Trust, except for those
provisions hereof which by their terms survive, shall terminate and the
Mortgaged Property shall become wholly clear of the liens, security interests,
conveyances and assignments evidenced hereby, which shall be promptly released
of record by Beneficiary in due form at Grantor's cost.
16.3. Notices. All notices, demands, requests or other communications to
-------
be sent by one party to the other hereunder or required by law shall be in
writing and shall be deemed to have been validly given or served by delivery of
the same in person to the intended addressee, or by depositing the same with
Federal Express or another reputable private courier service for next business
day delivery, or by depositing the same in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, in any event
addressed to the intended addressee at its address set forth on the first page
of this Deed of Trust or at such other address as may be designated by such
party as herein provided. All notices, demands and requests shall be effective
upon such personal delivery, or one (1) business day after being deposited with
the private courier service, or three (3) business days after being deposited in
the United States mail as required above. Rejection or other refusal to accept
or the inability to deliver because of changed address of which no notice was
given as herein required shall be deemed to be receipt of the notice, demand or
request sent. By giving to the other party hereto at least fifteen (15) days'
prior written notice thereof in accordance with the provisions hereof, the
parties hereto shall have the right from time to time to change their respective
addresses and each shall have the right to specify as its address any other
address within the United States of America.
16.4. Successors and Assigns; Joint and Several Liability. The terms,
---------------------------------------------------
provisions, indemnities, covenants and conditions hereof shall be binding upon
Grantor and the successors and assigns of Grantor, including all successors in
interest of Grantor in and to all or any part of the Mortgaged Property, and
shall inure to the benefit of Beneficiary, its directors, officers,
shareholders, employees and agents and their respective successors and assigns
and shall constitute covenants running with the land. The term "Beneficiary" as
used herein shall also mean and refer to any lawful holder or owner, including
pledgees and participants, of any of the Debt. If more than one person or
entity is the "Grantor" hereunder, each is jointly and severally
51
liable to perform the obligations of Grantor hereunder and all representations,
warranties, covenants and agreements made by Grantor hereunder are joint and
several.
16.5. Severability. A determination that any provision of this Deed of
------------
Trust is unenforceable or invalid shall not affect the enforceability or
validity of any other provision, and any determination that the application of
any provision of this Deed of Trust to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to any other persons or circumstances.
16.6. Gender. Within this Deed of Trust, words of any gender shall be
------
held and construed to include any other gender, and words in the singular shall
be held and construed to include the plural, and vice versa, unless the context
otherwise requires.
16.7. Waiver; Discontinuance of Proceedings. Beneficiary may waive any
-------------------------------------
single Event of Default by Grantor hereunder without waiving any other prior or
subsequent Event of Default. No waiver of an Event of Default shall be valid
for any purpose hereunder unless given in writing by Beneficiary. Beneficiary
may cure any Event of Default by Grantor hereunder without waiving the Event of
Default remedied. Neither the failure by Beneficiary to exercise, nor the delay
by Beneficiary in exercising, any right, power or remedy upon any Event of
Default by Grantor hereunder shall be construed as a waiver of such Event of
Default or as a waiver of the right to exercise any such right, power or remedy
at a later date. No single or partial exercise by Beneficiary of any right,
power or remedy hereunder shall exhaust the same or shall preclude any other or
further exercise thereof, and every such right, power or remedy hereunder may be
exercised at any time and from time to time. No modification or waiver of any
provision hereof nor consent to any departure by Grantor therefrom shall in any
event be effective unless the same shall be in writing and signed by
Beneficiary, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose given. No notice to nor demand
on Grantor in any case shall of itself entitle Grantor to any other or further
notice or demand in similar or other circumstances. Acceptance by Beneficiary
of any payment in an amount less than the amount then due on any of the Debt
shall be deemed an acceptance on account only and shall not in any way affect
the existence of an Event of Default. In case Beneficiary shall have proceeded
to invoke any right, remedy or recourse permitted hereunder or under the other
Loan Documents and shall thereafter elect to discontinue or abandon the same for
any reason, Beneficiary shall have the unqualified right to do so and, in such
an event, Grantor and Beneficiary shall be restored to their former positions
with respect to the Debt, the Loan Documents, the Mortgaged Property and
otherwise, and the rights, remedies, recourses and powers of Beneficiary shall
continue as if the same had never been invoked.
16.8. Section Headings. The headings of the sections and paragraphs of
----------------
this Deed of Trust are for convenience of reference only, are not to be
considered a part hereof and shall not limit or otherwise affect any of the
terms hereof.
16.9. Governing Law. THIS DEED OF TRUST WILL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED
WITHOUT REGARD TO ITS CONFLICTS OF LAWS RULES.
16.10. Counting of Days. The term "days" when used herein shall mean
----------------
calendar days. If any time period ends on a Saturday, Sunday or holiday
officially recognized by the state within which the Premises is located, the
period shall be deemed to end on the next succeeding business day. The term
"business day" when used herein shall mean a weekday, Monday
52
through Friday, except a legal holiday or a day on which banking institutions in
the state in which the Premises are located and in New York, New York are
authorized by law to be closed.
16.11. Relationship of the Parties. The relationship between Grantor and
---------------------------
Beneficiary is that of a borrower and a lender only and neither of those parties
is, nor shall it hold itself out to be, the agent, employee, joint venturer or
partner of the other party.
16.12. Unsecured Portion of Indebtedness. If any part of the Debt cannot
---------------------------------
be lawfully secured by this Deed of Trust or if any part of the Mortgaged
Property cannot be lawfully subject to the lien and security interest hereof to
the full extent of such indebtedness, then all payments made shall be applied on
said indebtedness first in discharge of that portion thereof which is unsecured
by this Deed of Trust.
16.13. Cross Default. An Event of Default hereunder shall be a default
-------------
under each of the other Loan Documents.
16.14. Inconsistency with Other Loan Documents. In the event of any
---------------------------------------
inconsistency between the provisions hereof and the provisions in any of the
other Loan Documents, it is intended that the provisions of the Note shall
control over the provisions of this Deed of Trust, and that the provisions of
this Deed of Trust shall control over the provisions of the Assignment of Leases
and Rents and Profits, the Environmental Indemnity Agreement and the other Loan
Documents.
16.15. No Merger. It is the desire and intention of the parties hereto
---------
that this Deed of Trust and the lien hereof do not merge in fee simple title to
the Mortgaged Property.
16.16. Rights With Respect to Junior Encumbrances. Without implying that
------------------------------------------
any person or entity has the right to do so, any person or entity purporting to
have or to take a junior Deed of Trust or other lien upon the Mortgaged Property
or any interest therein shall be subject to the rights of Beneficiary to amend,
modify, increase, vary, alter or supplement this Deed of Trust, the Note or any
of the other Loan Documents, and to extend the maturity date of the Debt, and to
increase the amount of the Debt, and to waive or forebear the exercise of any of
its rights and remedies hereunder or under any of the other Loan Documents and
to release any collateral or security for the Debt, in each and every case
without obtaining the consent of the holder of such junior lien and without the
lien or security interest of this Deed of Trust losing its priority over the
rights of any such junior lien.
16.17. Beneficiary May File Proofs of Claim. In the case of any
------------------------------------
receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment,
composition or other proceedings affecting Grantor or the principals, general
partners or managing members in Grantor, or their respective creditors or
property, Beneficiary, to the extent permitted by law, shall be entitled to file
such proofs of claim and other documents as may be necessary or advisable in
order to have the claims of Beneficiary allowed in such proceedings for the
entire Debt at the date of the institution of such proceedings and for any
additional amount which may become due and payable by Grantor hereunder after
such date.
16.18. Fixture Filing. This Deed of Trust shall be effective from the
--------------
date of its recording as a financing statement filed as a fixture filing with
respect to all goods constituting part of the Mortgaged Property which are or
are to become fixtures. This Deed of Trust shall also be effective as a
financing statement covering minerals or the like (including oil and gas) and is
to be filed for record in the real estate records of the county where the
Premises is situated. The
53
Mortgaged Property are or are to become fixtures. The address of the Beneficiary
from whom information concerning the security interest in the Mortgaged Property
may be obtained is as set forth on page 1 of this Deed of Trust.
16.19. Counterparts. This Deed of Trust may be executed in any number of
------------
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if the signatory(s) hereto had signed
the same signature page.
16.20. Recording and Filing. Grantor will cause the Loan Documents and
--------------------
all amendments and supplements thereto and substitutions therefor to be
recorded, filed, re-recorded and re-filed in such manner and in such places as
Beneficiary shall reasonably request, and will pay on demand all such recording,
filing, re-recording and re-filing taxes, fees and other charges. Grantor shall
reimburse Beneficiary, or its servicing agent, for the costs incurred in
obtaining a tax service company to verify the status of payment of taxes and
assessments on the Mortgaged Property.
16.21. Entire Agreement and Modifications. This Deed of Trust and the
----------------------------------
other Loan Documents contain the entire agreements between the parties relating
to the subject matter hereof and thereof and all prior agreements relative
hereto and thereto which are not contained herein or therein are terminated.
This Deed of Trust and the other Loan Documents may not be amended, revised,
waived, discharged, released or terminated orally but only by a written
instrument or instruments executed by the party against which enforcement of the
amendment, revision, waiver, discharge, release or termination is asserted.
16.22. MAXIMUM INTEREST. THE PROVISIONS OF THIS DEED OF TRUST AND OF ALL
----------------
AGREEMENTS BETWEEN GRANTOR AND BENEFICIARY, WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER WRITTEN OR ORAL, ARE HEREBY EXPRESSLY LIMITED SO THAT IN NO
CONTINGENCY OR EVENT WHATSOEVER, WHETHER BY REASON OF DEMAND OR ACCELERATION OF
THE MATURITY OF THE NOTE OR OTHERWISE, SHALL THE AMOUNT CHARGED, CONTRACTED FOR,
RECEIVED, PAID, OR AGREED TO BE PAID ("INTEREST") TO BENEFICIARY FOR THE USE,
--------
FORBEARANCE OR RETENTION OF THE MONEY LOANED UNDER THE NOTE EXCEED THE MAXIMUM
AMOUNT PERMISSIBLE UNDER APPLICABLE LAW. IF, FROM ANY CIRCUMSTANCE WHATSOEVER,
PERFORMANCE OR FULFILLMENT OF ANY PROVISION HEREOF OR OF ANY AGREEMENT BETWEEN
GRANTOR AND BENEFICIARY SHALL, AT THE TIME PERFORMANCE OR FULFILLMENT OF SUCH
PROVISION SHALL BE DUE, EXCEED THE LIMIT FOR INTEREST PRESCRIBED BY LAW OR
OTHERWISE TRANSCEND THE LIMIT OF VALIDITY PRESCRIBED BY APPLICABLE LAW, THEN,
IPSO FACTO, THE OBLIGATION TO BE PERFORMED OR FULFILLED SHALL BE REDUCED TO SUCH
- ---- -----
LIMIT, AND IF, FROM ANY CIRCUMSTANCE WHATSOEVER, BENEFICIARY SHALL EVER RECEIVE
ANYTHING OF VALUE DEEMED INTEREST BY APPLICABLE LAW IN EXCESS OF THE MAXIMUM
LAWFUL AMOUNT, AN AMOUNT EQUAL TO ANY EXCESSIVE INTEREST SHALL BE APPLIED TO THE
REDUCTION OF THE PRINCIPAL BALANCE OWING UNDER THE NOTE IN THE INVERSE ORDER OF
ITS MATURITY (WHETHER OR NOT THEN DUE) OR, AT THE OPTION OF BENEFICIARY, BE PAID
OVER TO GRANTOR, AND NOT TO THE PAYMENT OF INTEREST. ALL INTEREST (INCLUDING
ANY AMOUNTS OR PAYMENTS DEEMED TO BE INTEREST) PAID OR AGREED TO BE PAID TO
BENEFICIARY SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE AMORTIZED,
PRORATED, ALLOCATED AND SPREAD THROUGHOUT THE FULL PERIOD
54
UNTIL PAYMENT IN FULL OF THE PRINCIPAL BALANCE OF THE NOTE SO THAT THE INTEREST
THEREON FOR SUCH FULL PERIOD WILL NOT EXCEED THE MAXIMUM AMOUNT PERMITTED BY
APPLICABLE LAW. THIS SECTION WILL CONTROL ALL AGREEMENTS BETWEEN GRANTOR AND
BENEFICIARY.
16.23. Certain Matters Relating to Mortgaged Property Located in the State
-------------------------------------------------------------------
of Texas. With respect to the Mortgaged Property which is located in the State
- --------
of Texas, notwithstanding anything contained herein to the contrary:
(a) Without limitation to the provisions of this Deed of Trust, and
cumulative of the remedies provided herein, the following provisions shall be
applicable to foreclosures in the State of Texas:
(i) Beneficiary shall have the right, by and through Trustee,
or otherwise, to sell or offer for sale the Mortgaged
Property upon the occurrence of an Event of Default, in
such portions, order and parcels as Beneficiary may
determine, with or without having first taken possession
of the same, to the highest bidder for cash at public
auction in accordance with the requirements of Section
51.002 of the Texas Property Code, as it may be amended,
supplemented, replaced or succeeded from time to time (the
"Property Code"). In instances where the Property is
-------------
located in the State of Texas, such sale shall be made at
the courthouse of the county in which the Mortgaged
Property (or any portion thereof to be sold) is located,
whether the parts or parcels thereof, if any, in different
counties are contiguous or not, and without the necessity
of having any personal property present at such sale. Each
such sale shall be made in the area designated by the
county commissioners for foreclosure sales (or, if no area
has been designated, at the location at the courthouse
designated by Beneficiary by or through Trustee in the
written notice hereinafter described), on the first
Tuesday of a month between the hours of 10:00 a.m. and
4:00 p.m. after advertising the time, place and terms of
sale and that portion of the Mortgaged Property to be sold
by posting or causing to be posted written or printed
notice thereof at least twenty-one (21) days before the
date of the sale, both at the courthouse door of each
county in which the Mortgaged Property is located and with
the county clerk of each county in which the Mortgaged
Property is located, which notice shall be posted at the
courthouse door and filed with the county clerk by
Trustee, or by any Person acting for him. The written
notice shall include the earliest time at which the sale
will be held.
(ii) Beneficiary shall serve, or shall cause to be served,
at least twenty-one (21) days before the date of sale
written or printed notice of the proposed sale by
certified mail on each debtor obligated to pay the Debt
according to the records of Beneficiary by the deposit of
such notice in the United States mail, postage prepaid and
addressed to the debtor at the debtor's last known address
as shown by the records of Lender.
55
If and to the extent that the Property Code shall at any
time or from time to time be amended to change the manner
or procedure of sale as set forth above, then the
provisions of this paragraph shall be deemed to be
automatically amended to conform such provisions to the
amended provisions of the Property Code. The affidavit of
a Person knowledgeable of the facts to the effect that
service was completed is prima facie evidence of service.
(iii) Beneficiary may, at its option, accomplish all or
any of the aforesaid in such manner as permitted or
required by the Property Code relating to the sale of real
property or by Chapter 9 of the Texas Business and
Commerce Code, as it may be amended, supplemented,
replaced or succeeded from time to time (the "Commerce
--------
Code") relating to the sale of collateral after default by
----
a debtor, or by any other present or subsequent articles
or enactments relating thereto. Nothing contained in this
paragraph shall be construed to limit in any way Trustee's
right to sell the Mortgaged Property by private or
judicial sale if, and to the extent that, such private or
judicial sale is permitted under the laws of the state
where the Mortgaged Property (or that portion thereof to
be sold) is located, or by public or private sale after
entry of a judgment by any court of competent jurisdiction
ordering the same. At any such sale:
A. whether made under the power herein contained, the
Property Code, the Commerce Code, any other Legal
Requirement, or by virtue of any judicial
proceedings or any other legal right, remedy or
recourse, it shall not be necessary for Trustee to
have physically present, or to have constructive
possession of, the Property, and the title to and
right of possession of any such Property sold
shall pass to the purchaser thereof as completely
as if the same had been actually present and
delivered to the purchaser at such sale. Grantor
shall deliver to Trustee any portion of the
Property not actually or constructively possessed
by Trustee immediately upon demand by Trustee;
B. each instrument of conveyance executed by Trustee
shall contain a general warranty of title, binding
upon Grantor;
C. each and every recital contained in any instrument
of conveyance made by Trustee shall conclusively
establish the truth and accuracy of the matters
recited therein, including, without limitation,
nonpayment of the Debt, advertisement and conduct
of such sale in the manner provided herein and
otherwise by law, and appointment of any successor
Trustee hereunder;
D. any and all prerequisites to the validity thereof
shall be prima facia presumed to have been
performed;
56
E. the receipt by Trustee or such other party or
officer making the sale of the full amount of the
purchase money shall be sufficient to discharge
the purchaser or purchasers from any further
obligation for the payment thereof, and no such
purchaser or purchasers, or his or their assigns
or personal representatives, shall thereafter be
obligated to see to the application of such
purchase money or be in any way answerable for any
loss, misapplication or nonapplication thereof;
F. to the fullest extent permitted by law, Grantor
shall be completely and irrevocably divested of
all of its right, title, interest, claim and
demand whatsoever, either at law or in equity, in
and to the Mortgaged Property or portion thereof
sold, and such sale shall be a perpetual bar, both
at law and in equity, against Grantor and against
all other persons claiming or to claim the
Mortgaged Property or portion thereof sold or to
any part thereof; and
G. to the extent and under such circumstances as are
permitted by law, Beneficiary may be a purchaser
at any such sale.
(iv) In addition to the rights and remedies described
above, Beneficiary may also exercise any and all other
rights, remedies and recourses granted under the Loan
Documents or now or hereafter existing in equity, at law,
by virtue of statute or otherwise.
(v) If the Beneficiary elects to cause the Mortgaged
Property or any portion thereof to be sold, Trustee shall
sell the Mortgaged Property in accordance with Article XV
hereof, to the extent the same is not inconsistent with
the provisions of this Section 17.1.
(b) WAIVER OF CONSUMER RIGHTS UNDER TEXAS DECEPTIVE TRADE PRACTICES --
------------------------------------------------------------------
CONSUMER PROTECTION ACT. GRANTOR REPRESENTS AND ACKNOWLEDGES THAT (I) IT IS A
- -----------------------
"BUSINESS CONSUMER" AS DEFINED IN THE TEXAS DECEPTIVE TRADE PRACTICES --
CONSUMER PROTECTION ACT, AS SAME MAY BE AMENDED, SUPPLEMENTED, REPLACED OR
SUCCEEDED FROM TIME TO TIME (THE "ACT"), (II) IT HAS KNOWLEDGE AND EXPERIENCE IN
FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS
OF A TRANSACTION, (III) IT IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING
POSITION WITH RESPECT TO BENEFICIARY, (IV) IT HAS BEEN REPRESENTED BY COUNSEL OF
ITS SELECTION IN CONNECTION WITH THE LOAN AND THE TRANSACTIONS CONTEMPLATED
THEREBY OR UNDER ANY OF THE OTHER LOAN DOCUMENTS, WHICH COUNSEL WAS NOT DIRECTLY
OR INDIRECTLY IDENTIFIED, SUGGESTED OR SELECTED BY BENEFICIARY OR AN AGENT OF
BENEFICIARY, (V) THE TRANSACTIONS INVOLVE TOTAL CONSIDERATION BY GRANTOR OF MORE
THAN ONE HUNDRED THOUSAND ($100,000.00) DOLLARS, AND (VI) THE TRANSACTIONS AND
THIS
57
DOCUMENT DO NOT INVOLVE GRANTOR'S RESIDENCE. FURTHERMORE, GRANTOR WAIVES ITS
RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES --CONSUMER PROTECTION ACT, SECTION
17.41 ET. SEQ., TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES SPECIAL
RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF GRANTOR'S OWN
SELECTION, GRANTOR VOLUNTARILY CONSENTS TO THIS WAIVER.
(c) INDEMNITY AND RELEASE: WHEREVER IN THIS DEED OF TRUST OR THE OTHER
---------------------
LOAN DOCUMENTS, BENEFICIARY OR TRUSTEE IS INDEMNIFIED, OR THE LIABILITY OF
BENEFICIARY OR TRUSTEE IS WAIVED OR RELEASED, GRANTOR EXPRESSLY AGREES THAT SUCH
WILL INCLUDE AND APPLY TO, WITHOUT LIMITATION, THE NEGLIGENCE OF BENEFICIARY AND
TRUSTEE.
ARTICLE XVII.
CONCERNING THE TRUSTEE
----------------------
17.1. Certain Rights. With the approval of Beneficiary, Trustee shall
--------------
have the right to take any and all of the following actions: (i) to select,
employ and consult with counsel (who may be, but need not be, counsel for
Beneficiary) upon any matters arising hereunder, including the preparation,
execution and interpretation of the Loan Documents, and shall be fully protected
in relying as to legal matters on the advice of counsel, (ii) to execute any of
the trusts and powers hereof and to perform any duty hereunder either directly
or through his or her agents or attorneys, (iii) to select and employ, in and
about the execution of his or her duties hereunder, suitable accountants,
engineers and other experts, agents and attorneys-in-fact, either corporate or
individual, not regularly in the employ of Trustee (and Trustee shall not be
answerable for any act, default, negligence, or misconduct of any such
accountant, engineer or other expert, agent or attorney-in-fact, if selected
with reasonable care, or for any error of judgment or act done by Trustee in
good faith, or be otherwise responsible or accountable under any circumstances
whatsoever, except for Trustee's gross negligence or bad faith), and (iv) any
and all other lawful action that Beneficiary may instruct Trustee to take to
protect or enforce Beneficiary's rights hereunder. Trustee shall not be
personally liable in case of entry by Trustee, or anyone entering by virtue of
the powers herein granted to Trustee, upon the Mortgaged Property for debts
contracted for or liability or damages incurred in the management or operation
of the Mortgaged Property. Trustee shall have the right to rely on any
instrument, document, or signature authorizing or supporting any action taken or
proposed to be taken by Trustee hereunder, believed by Trustee in good faith to
be genuine. Trustee shall be entitled to reimbursement for expenses incurred by
Trustee in the performance of Trustee's duties hereunder and to reasonable
compensation for such of Trustee's services hereunder as shall be rendered.
Grantor will, from time to time, pay the compensation due to Trustee hereunder
and reimburse Trustee for, and save and hold Trustee harmless against, any and
all liability and expenses which may be incurred by Trustee in the performance
of Trustee's duties.
17.2. Retention of Money. All moneys received by Trustee shall, until
------------------
used or applied as herein provided, be held in trust for the purposes for which
they were received, and shall be segregated from any other moneys of Trustee.
17.3. Successor Trustees. Trustee may resign by the giving of notice of
------------------
such resignation in writing to Beneficiary. If Trustee shall die, resign or
become disqualified from
58
acting in the execution of this trust, or if, for any reason, Beneficiary, in
Beneficiary's sole discretion and with or without cause, shall prefer to appoint
a substitute trustee or multiple substitute trustees, or successive substitute
trustees or successive multiple substitute trustees, to act instead of the
aforenamed Trustee, Beneficiary shall have full power to appoint a substitute
trustee in succession who shall succeed to all the estates, rights, powers and
duties of the aforenamed Trustee. Such appointment may be executed by any
authorized agent of Beneficiary, and if such Beneficiary be a corporation and
such appointment be executed on its behalf by any officer of such corporation,
such appointment shall be conclusively presumed to be executed with authority
and shall be valid and sufficient without proof of any action by the board of
directors or any superior officer of the corporation. Grantor hereby ratifies
and confirms any and all acts which the aforenamed Trustee, or his or her
successor or successors in this trust, shall do lawfully by virtue hereof.
17.4. Perfection of Appointment. Should any deed, conveyance, or
-------------------------
instrument of any nature be required from Grantor by any Trustee or substitute
Trustee to more fully and certainly vest in and confirm to Trustee or substitute
Trustee such estates, rights, powers, and duties, then, upon request by Trustee
or substitute trustee, any and all such deeds, conveyances and instruments shall
be made, executed, acknowledged, and delivered and shall be caused to be
recorded and/or filed by Grantor.
17.5. Succession Instruments. Any substitute trustee appointed pursuant
----------------------
to any of the provisions hereof shall, without any further act, deed or
conveyance, become vested with all the estates, properties, rights, powers, and
trusts of its, his or her predecessor in the rights hereunder with like effect
as if originally named as Trustee herein; but nevertheless, upon the written
request of Beneficiary or of the substitute trustee, the Trustee ceasing to act
shall execute and deliver any instrument transferring to such substitute
trustee, upon the trusts herein expressed, all the estates, properties, rights,
powers, and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver any of the property and moneys held by such Trustee to the
substitute trustee so appointed in such Trustee's place.
17.6. No Representation by Trustee or Beneficiary. By accepting or
-------------------------------------------
approving anything required to be observed, performed, or fulfilled or to be
given to Trustee or Beneficiary pursuant to the Loan Documents, including,
without limitation, any officer's certificate, balance sheet, statement of
profit and loss or other financial statement, survey, appraisal or insurance
policy, neither Trustee nor Beneficiary shall be deemed to have warranted,
consented to, or affirmed the sufficiency, legality, effectiveness or legal
effect of the same, or of any term, provision, or condition thereof, and such
acceptance or approval thereof shall not be or constitute any warranty or
affirmation with respect thereto by Trustee or Beneficiary.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
59
IN WITNESS WHEREOF, Grantor has executed this Deed of Trust effective
as of the day and year first written above, regardless of the date actually
executed by the party.
GRANTOR:
-------
DMG TEXAS ALC PARTNERS, L.P.,
a Texas limited partnership
By: DMG TEXAS ALC, INC.,
a Nevada corporation,
its General Partner
By: _________________________
Name: William McBride, III
Title: President
EXHIBIT A
---------
Legal Description
-----------------
SCHEDULE I
----------
PARTIAL RELEASE PARCEL ALLOCATED LOAN AMOUNT
- ---------------------- ---------------------
Property Name/County
- --------------------
1. Cimmaron/Midland $ 2,000,000.00
2. Hopkins/Hopkins $ 1,620,000.00
3. Mercer/Dallas $ 1,970,000.00
4. Redbud/Collin $ 2,400,000.00
5. Rose/Jefferson $ 3,120,000.00
6. Katy/Grayson $ 1,520,000.00
7. Wren/Johnson $ 2,000,000.00
--------------
$14,630,000.00